Is a Home Warranty Worth It?Updated June 15, 2022 Home Warranty
As a homeowner, you may want to consider investing in a home warranty. This type of warranty coverage helps protect you against unexpected expenses associated with the major systems and appliances in your home. Items like dishwashers and other kitchen appliances, the electrical system, plumbing system, and water heaters typically aren’t included in your homeowners insurance coverage. When they break or need to be replaced, you’re left with a large bill unless you have a home warranty plan in place.
5 Benefits of Buying a Home Warranty
- Peace of Mind
- Contracted Repair Professionals
- Cost Savings If Something Breaks
- No DIY Required
- Consistent Budgeting
Home warranties come in a wide variety of coverage packages from a vast collection of companies. When deciding whether a home warranty is worth it, try to determine exactly what you need and what your premium and service costs will be to meet that need.
Once you have that information, it’s important to consider the benefits having a home warranty can bring. Weighing the cost of what you need against what you’ll get in return can help you decide whether the money you spend on a home warranty plan is a worthwhile investment.
It’s important not to confuse a home warranty with homeowners insurance. Your homeowners insurance is designed to protect you from damage to your home, such as from a fire or fallen tree. However, homeowners insurance will not cover costs related to appliances or systems in your home that need to be repaired or replaced from normal wear and tear or manufacturer defects. Learn more about home warranty vs homeowners insurance.
Peace of Mind
Purchasing a home warranty can lessen the worry that comes with having an older home with older components or systems. If you’re a homeowner without much of an emergency fund, having a home warranty in place can offer peace of mind when it comes to being protected against sudden and unexpected expensive repair bills. This is especially helpful if you recently purchased the home. If you’re unsure of how well systems and appliances have been maintained, you can rest easy knowing that your home warranty will help cover repair or replacement costs.
A home warranty provides peace of mind when you’re living in an older home and face the possibility of several appliances and/or systems failing at the same time as they reach the end of their useful lives. Having a home warranty in place in this situation can help soften the blow of those repair or replacement costs.
Most home warranty companies offer reporting services 24 hours a day, seven days a week. No matter when an appliance or vital home system breaks down, you can immediately report it. In some emergency cases, you may even be able to get a service technician to your home right away. Knowing you have round-the-clock emergency support adds yet another layer to your peace of mind.
Contracted Repair Professionals
When something breaks down and you have a home warranty plan in place, all you have to do is report the issue to your warranty company. The warranty company has existing relationships with local repair professionals, so you don’t have to worry about vetting potential repair partners and choosing the one you’d like to work with.
Of course, if you have a repair professional you trust, you always can request to work with that partner, but the ultimate choice of a service provider typically is up to the home warranty company. Some home warranty providers may allow you to choose your own repair professional, so just make sure you know what you’re signing up for when you enter into a home warranty service contract with a partner.
Cost Savings If Something Breaks
One of the greatest things about home warranty plans is the set service call fee that comes with your coverage. That means if something breaks down, you’ll pay your flat service fee, and as long as the repair is covered under your policy, you won’t pay any more.
While some home warranties may have caps at which they’ll pay out for certain repairs, chances are you’ll still pay substantially less for major repairs and replacements than you would without your warranty in place, even if the project ends up being labor-intensive. If you’ve just spent a large down payment on a new home, a home warranty might be especially attractive to help keep repair costs to a minimum in the near future.
In some cases, your home warranty provider may provide discounts in other areas. For example, American Home Shield offers discounts on the purchase of air filters for your home or upgrades to name-brand appliances.
No DIY Required
Some of us just aren’t handy. And that’s okay. When you enter into a home warranty contract, that means you don’t have to worry about watching YouTube videos to try and figure out how to fix that leaky toilet or revive a washing machine if it dies. Instead, your home warranty company will make sure that a true professional will do the work to repair your issue, which means it will be done right and you can be confident in the results.
The reality is that every appliance and system in your home will likely break down at some point and need repair or replacement. If you know you can’t count on your own skills to cover those kinds of repairs, it may be smart to make sure you have a home warranty plan in place.
Since you pay a fixed cost for your home warranty coverage and a fixed cost for service fees, budgeting for household repairs and expenses loses its volatility. While some warranty companies place a coverage limit on the amount they will pay for a repair, your costs overall are much more consistent and easier to plan for than with no home warranty in place.
Is a Home Warranty Worth It?
Are home warranty plans worth it? Ultimately, it depends on your situation. A home warranty isn’t a magical, one-size-fits-all solution that will keep a homeowner from ever having to spend money on home maintenance. A lot depends on factors like your own DIY skills, the age of your home, and the maintenance and quality of your appliances.
Do Your Research
The most important thing is to do your research and choose a reputable home warranty company that charges a fair premium and service fee for quality work done by professionals. It may help to read customer service reviews from some of the nation’s top-rated home warranty companies.
Some of the best home warranty companies include:
- American Home Shield
- Choice Home Warranty
- Cinch Home Services
- Select Home Warranty
- AFC Home Club
- Liberty Home Guard
- First American Home Warranty
- ARW Home
- First Premier Home Warranty
Pay attention to how the warranty company treats its customers and what they report regarding response times, customer service, and reliability of repairs. This can give you a lot of useful information that can help you make a sound decision.
Get a Quote
Look for a home warranty provider that will provide you with an online quote. Many companies will allow you to provide some basic information about your home and systems and then they will generate an initial quote for you. Once you have quotes from potential partners, you'll have a bet can compare to find the one that’s most friendly for your budget.
Learn more: How much does a home warranty cost?
Try to find a home warranty provider that offers a plan that covers everything you need. Generally, the more options and flexibility a home warranty company provides, the more likely you are to find a plan that fully meets your needs. Next, evaluate the company’s service costs against your estimated premiums to determine which warranty company offers the best deal overall while providing the coverage you need.
Understand the Claim Process
It’s important to research what happens when you file a claim. Many home warranty companies have a user-friendly online system that allows you to submit a claim from your laptop, desktop, or smartphone. In many cases, you also may be able to call in a claim.
Choose a company that makes it easy for you to report your needs. Find out the coverage limits of the various home warranty policies you consider. As a general rule, look for a warranty company that pays out at least $2000 per item, per year.
Is a Home Warranty Right for You?
It’s important to think about your specific situation. If you’re moving into a fairly new house where appliances or systems are still under their original warranties and unlikely to need repair, a home warranty may not be as valuable for you.
But if you’re moving into an older home with original systems and appliances, there’s a possibility they all could fail at or near the same time, which can add up to substantial expenses for you. In that case, it’s likely that a home warranty could save you money – plus time, worry and heartache. Just make sure in this case that you partner with the best home warranty company that will provide coverage for your systems and appliances, no matter their age or pre-existing conditions.
If you’re a new homeowner, a homeowner with few DIY skills, or a homeowner with aging appliances and systems, a home warranty plan can be a very smart investment. Evaluate your needs, check customer reviews, and research the best cost-effective plan. This way, you can save money and rest easy knowing you won’t be saddled with the full cost of unexpected repairs in your home.