As a roofing company, when we deal with home warranties, it is typically only for covering roof repairs after roof damage, but it is important for homeowners to have an understanding of all pros and coons of paying for a home warranty. A home warranty seems like an impressive tool to reduce the worry of having to pay big money to make repairs to your home should something fail. Is it worth the cost, though? Before you invest in a home warranty, it’s important to understand how they work and when they don’t.
What Is a Home Warranty?
A home warranty is purchased through a third-party provider who promises to provide repair and replacement service for some of the major systems in the home should they fail you while the warranty is in place. Most policies have numerous restrictions. Generally, this will include the HVAC, plumbing, electrical, and other major components in your home, even your appliances.
When a problem occurs with a covered system, you call the home warranty provider. They send out a licensed professional to troubleshoot and get the system back up and working. The certified contractor will make repairs, if possible, or may recommend replacement when it cannot be repaired.
The home warranty typically covers the cost of the work that needs to be done, up to a certain amount, based on the policy itself.
What do home warranties typically cover?
Be sure to read the details of your policy specifically to know what’s covered by your warranty. Most of the time, it will cover breakdowns that occur due to normal wear and tear. Most policies do not cover damage that occurs as a result of poor maintenance and upkeep, natural disasters, or misuse.
Should You Purchase a Home Warranty?
There are a wide range of warranty options available. Before you make the decision whether to purchase one or not, consider the following factors, but then be sure to read the details of the policy you elect to purchase to verify details.
Peace of mind for unexpected, high costs
A major system breaking down in your home could be a very expensive problem to fix. That could include the failure of the refrigerator or the heating system failing to work. When this happens, you could find yourself having to pay for emergency repair technicians to come out to fix your system. That’s expensive on its own, but there’s also the risk of not being able to find someone to come out if the problem is more widespread.
A home warranty can alleviate the worry about this cost. It can help ensure you have peace of mind even if you do not have a large savings account to cover a major breakdown.
You know you’re getting a licensed contractor
Read the details of the warranty to know who will come to your home when there’s a need for a repair. Most often, you’ll have a certified contractor to handle the work for you. Some will ensure the contractor is fully licensed, insured, and bonded, which can reduce some of your risks. That often means you can trust the workmanship of the provider.
What Are Some Situations Where You’ll Benefit from a Home Warranty?
Chances are good you’ll benefit from purchasing a home warranty in several situations:
- Your home is older, and it is likely to have some breakdowns or significant repairs in the coming year or more.
- You want to minimize the amount of money you have to pay out of pocket every time an appliance or major home system breaks down.
- You’ve had trouble finding a qualified contractor in your area to handle repairs in the past and don’t want to make that mistake again.
- You are a new homeowner, and you have no idea what the age or condition of the home is, but you also don’t want to be saddled with significant unknown costs.
- You plan to sell your home in the coming year. A home warranty could transfer to the new home buyer, which could make it a nice selling point for the home.
It sounds great, right? As long as you are okay with the price of the home warranty, it could work well in these situations.Â
What Are Some Situations Where Home Warranties Are Not Worth the Cost?
There are some situations where it may not be beneficial to purchase a home warranty. Specifically, be sure you read and understand how they work and the limits of the specific policy you select. Here are some factors that could limit you.
Maintenance can be a concern
If the repair technician shares that the appliance was not maintained properly, that could mean the repair costs are not covered under warranty. That’s a concern for some people because what is required for maintenance isn’t always clear. Sometimes you may disagree about what the contractor states as being a maintenance issue.
This becomes a big concern for those who purchased a home and had a previous owner who did not maintain key systems. For example, the air conditioner may not have been maintained well prior to your purchase, and that could lead to a denial of claims now for you.
It’s up to the contractor to decide what’s next
Often with a home warranty, the contractor will determine if the system can be repaired or needs to be replaced. They may endlessly work to repair it without wanting to replace it due to the cost. That may be a temporary solution, though, and you may have some situations where you’ll need to call out the repair team often.
There’s no ability to choose who does the work
The homeowner typically does not have the ability to choose which technician does the work on their home. That means if you want a specific company or someone you trust to do the work, you don’t have the luxury of choosing that. Instead, you have to go with whoever the company sends out.
Timelines can be concerning
Be sure to read through the requirements for when the company must send someone out to your home. For example, it may take them a week or longer to have someone out to your home if it is determined to be a non-emergency. You also want to be sure that you have some ability to choose when they come, especially if you are not home all of the time.
A home warranty may not be worth the cost in some situations:
- Your home is brand new, having just been under construction. That often means each system has a warranty from the manufacturer in place, and the risk of repair needs is low.
- You want flexibility in choosing a contractor or technician to help you with your repairs.
- You want to be able to pick the model or brand of a new appliance or system put into your home, as most companies will only replace it with something similar without consideration for upgrades.
- You are handy and can handle the ongoing repairs and upgrade that need to be done within your home, or you’re willing to pay someone to do so.
- You are not sure if maintenance issues are present in the home from previous owners.
How to Know Whether to Buy a Home Warranty
It’s not easy to make a decision about buying a home warranty or not. The key here is that there are good and bad aspects to it.
Start with a home inspection if you have not already had one. Get a good idea of the condition of all major systems in your home and any previous maintenance issues that may make a home warranty ineffective. This can also give you an idea of the amount of life the major systems in your home may have left in them.
Determine if most of the home appliances and systems in your home already have a warranty in place that could help to offset some of the repair needs you may have over time. If your home is already well covered with repairs, it may not be wise.
You could put the money you spend on a home warranty into a home emergency account and gain interest on it. The only time you can benefit from a home warranty is if there is a problem and they have to come out. These warranties do not typically cover any maintenance and upkeep work you’ll need to do on your own to ensure your home remains in good condition.
Finally, if you want the peace of mind that a home warranty can offer and the cost is within your budget, compare a few providers and determine which offers the most comprehensive protection with the fewest restrictions. Be sure to read through all exclusions and limitations to ensure you know exactly what to expect when making a purchase.
For many people, a home warranty can be a good way to get back up when there is a problem with your home’s heating, cooling, plumbing, or appliances. They can be affordable investments to make when they provide the type and amount of coverage you need. Ultimately, you have to decide if this is the right move to protect your home’s value.
