The only way to know if home warranties are worth it is to understand what it is and what it is not. When you purchase a home, chances are you will be offered a home warranty as a protection against expensive and unforeseen events. It sounds like a wise financial decision, but is it really? Let’s find out.
What Exactly is a Home Warranty?
Simply put, a home warranty is a service agreement. Unlike home insurance which covers damage from unforeseen events, a home warranty focuses on the wear and tear of essential home systems and appliances. Think of it as a protection plan for your HVAC, electrical systems, plumbing, and key appliances like your fridge or washing machine.
Coverage Insights: The Dos and Don’ts
A warranty’s scope is strictly what’s in the contract. It usually includes various appliances and systems, with options to add coverage for extras like pools or septic systems. But remember, if it is not stated in the contract, then it is not covered.
Pros and Cons: Making the Right Choice
| Pros |
Cons |
| Peace of Mind: Assurance of professional help for home repairs. | Coverage Limits: Limits may not fully cover replacement costs. |
| Financial Planning: Mitigates unexpected repair costs, with known premiums and fees. | Fine Print: Important details about coverage limits might be overlooked. |
| Ease of Repair: Simplified access to service contacts and repairs, especially for those not handy with repairs. | Service Limitations: Restrictions on brands for replacements and limitations in choosing contractors. |
| Budget Predictability: Regular premium payments allow for easier budgeting of home maintenance costs. | Exclusions: Home warranties won’t cover unlisted items, pre-existing conditions, or manufacturer defects. |
| Tailored Coverage: Option to customize policies with add-ons for specific needs. | Cost-Benefit Analysis: Need to evaluate if the annual cost and service fees outweigh the benefits. |
Budgeting for a Warranty
With annual costs over $500 plus service fees, home warranties are not a small financial consideration. This price can increase based on the extent of the coverage, the size of the home, and any additional options or add-ons selected. Additionally, there are usually service fees for each repair call, which can range from $75 to $125 or more per visit. You must weigh these costs against the benefits, particularly if you are capable of handling minor repairs yourself.
Selecting the Right Home Warranty Provider
Look for companies that are transparent with their plan details, coverage limits, and exclusions. The best providers offer flexible plans to match your needs and a strong reputation for customer service. Here is a list of some of the top-rated home warranty providers in the United States for 2023:
- Liberty Home Guard – Known for its outstanding customer service and transparent pricing. It offers a 60-day workmanship guarantee and plans ranging from $600 to $720+ annually.
- American Home Shield – Praised for offering comprehensive and customizable coverage plans. It’s one of the most established providers with annual costs ranging from $432 to $456.
- Select Home Warranty – Recognized for providing great value with reasonably priced premiums and fees. It offers various plans covering major appliances and systems.
- America’s First Choice Home Club – Best for customization options, it allows homeowners to hire their contractors and offers 24/7 customer service. Annual plans range from $480 to $709.
- First American Home Warranty – Known for its reliability and affordable monthly premiums. It offers 24/7 claim submission and annual costs range from $432 to $456.
- Elite Home Warranty – Offers flexible coverage options with plans covering both essential appliances and home systems.
- Cinch Home Services – Stands out for its additional perks like rust and corrosion coverage and a 180-day workmanship guarantee. It features an easy-to-use digital platform for scheduling services.
- 2-10 Home Buyers Warranty – Offers the cheapest appliance plan and additional coverage options for HVAC systems. It is known for its affordable and comprehensive plans.
- ARW Home – Notable for its variety of warranty options and affordable service call fees.
- Choice Home Warranty – Rated as the best overall, it offers comprehensive coverage at competitive prices and is known for its overall reliability and customer satisfaction.
When considering a home warranty, it’s important to assess your own needs and compare the offerings of these top providers to find the best fit for your home.
FAQs
How do home warranties differ from homeowners insurance?
Home warranties cover breakdowns from regular use, while home insurance focuses on accidental or nature-caused damage.
What should I consider before getting a home warranty?
Think about your budget, the condition of your home’s systems and appliances, your repair skills, and the ease of finding repair services.
Are there special warranty plans for older homes?
Yes, providers like The Home Service Club cater specifically to older homes, offering coverage regardless of the age of appliances and systems.
Conclusion
In essence, home warranties can be a valuable tool in managing home maintenance. They offer not just financial relief but also the convenience of dealing with home repairs. Understanding what these warranties entail and choosing the right provider are key steps in making the most of their benefits.
