What Is a Home Warranty?
Before deciding whether a home warranty is right for you, it’s crucial to understand what they are and how they work. Some people may confuse home warranties with home insurance, but they are not the same type of policy. A home warranty isn’t meant to be used in place of home insurance. Home insurance is a requirement for any homeowner to have a mortgage. A home warranty, however, is optional.
Homeowner’s insurance is meant to protect you from financial loss if your home is damaged through unforeseen circumstances such as a wind storm or fire. On the other hand, a home warranty is a particular type of insurance policy. It is designed to cover normal wear and tear on your home’s major appliances as they age.
With a home warranty, the annual premium can range from a few hundred dollars to upwards of a thousand dollars, depending on how big your home is. When a major appliance breaks down, you’ll pay a deductible, and the warranty company will send out a contracted service to make necessary repairs. Deductibles for home warranties vary based on the specific policy you have. Warranty companies will also replace appliances if necessary.
This can make typical home maintenance and repairs easy for some, but they’re not the best option for everyone.
Home Warranty Benefits
Every appliance or home system will break down at some point, and often it seems that this occurs at the most inconvenient of times. Having a home warranty can provide you with peace of mind. You won’t have to worry about calling around for repair estimates when something breaks. You simply contact the warranty company, and they will send out a professional to take care of the issue. A home warranty can be helpful for first-time homebuyers and those who may not be skillful when it comes to fixing things around the house. Those who are budget conscious may also benefit from a home warranty by limiting unanticipated expenses and being able to spread out the cost of the premium.
Home Warranty Drawbacks
While home warranties may seem like a good deal, they aren’t for everyone. Warranties don’t cover everything, so you’ll need to be aware of what your specific policy excludes. Another caveat of home warranties is that they only include items that have been “properly maintained.” Proper maintenance of appliances doesn’t mean the same thing to everyone, and as a result, this often becomes a sticking point when dealing with the warranty company. Also, consider that even if you have taken proper care of an item, the previous owner may not have. Another significant drawback can be the fact that you’re paying out money in advance for something that you may not end up needing. Some years are better than others, and you might not always have critical repairs that need to be made, but you’ll still have paid out your premium.
In the end, home warranties are a gamble, and each homeowner must decide for themselves whether they are worth the investment. It’s essential to research any home warranty before signing a contract. Ensure you are aware of what would and would not be covered. Only you can decide if it’s a worthwhile investment for you or not.