Home Warranty Buyers Guide
Reviewer: Charles Weaver | January 23, 2018Â
Homeowners â new or aging appliances? Expensive HVAC systems? You can protect against unexpected expenses with a home warranty plan.
Home Warranty Basics
Home warranties can provide peace of mind. These are essentially insurance policies that protect you from major home expenses. They are particularly useful to first-time homebuyers who are unfamiliar with home maintenance, and new homeowners who donât know the true condition of the appliances or home systems theyâre buying. Often a seller will purchase a home warranty for a homebuyer to sweeten the attractiveness of a sale, or the buying real estate agent will purchase a home warranty for their client as a gift. These policies provide an important extra level of protection that homeowners insurance often misses.Â
Benefits of a Home Warranty
Whether or not youâd benefit from a home warranty depends largely upon your situation. Some of the benefits are peace of mind for knowing that youâre covered in the event of a major appliance breakdown, or system failure like internal plumbing problems that can lead to catastrophic expenses. Home warranties fill an important gap between homeowners insurance and appliance warranties, where homeowners are especially exposed to risk.
âÂ Eliminates costly repairs from eating up your paychecks.
âÂ Covers major appliances that make a home comfortable.
âÂ Increases the ability for you to sell your home.
âÂ Covers a variety of different contractor visits.
âÂ Provides trusted contractors to fix your appliances.
âÂ Adds peace of mind knowing costs are controlled.
Those most likely to appreciate the peace-of-mind benefits are new and first time homeowners. Buying a home, and the first few years in a new home, can be exciting but also stressful. Many people are spread thin financially when they purchase a new home, and the thought of a major expense popping up is scary.
Cost of a Home Warranty
Home warranties are not expensive. They range from $300 to $500 per year depending on the coverage and benefits. Itâs generally a rather cheap way of guarding against major catastrophe. If youâre planning on selling your home, or are a new homeowner, a home warranty is highly recommended.Â
Do I Need a Home Warranty?
If you purchased or live in a new home, are handy and comfortable repairing your own home and appliances, or are very familiar with the state of your home systems, chances are you wonât need one. But if you just purchased an older home, are spread thin financially, and canât absorb the cost of a major plumbing, HVAC, or appliance breakdown, a home warranty could make sense.
You may need a home warranty if any of the following apply:
âÂ Old appliances
âÂ Inability to repair appliances on your own
âÂ Your home is more than five years old
âÂ No trusted handyman
âÂ Not enough money for costly repairs
âÂ First time homeowner
Homeowners Insurance Vs. Home Warranty
Whatâs the difference between homeowners insurance and a home warranty? Homeowners insurance handles all the accidental damages that can happen to your property, like wind damage, fire, or flooding.
AÂ warranty company offers home warranties to cover unexpected breakdowns of your homeâs systems and appliances due to normal wear and tear. UnlikeÂ homeowners insurance,Â which is usually mandatory, home warranties are more like a service contract for appliances or systems that will end up aging or breaking down eventually.
For example, if your toddler uses your dishwasher door as a trampoline and breaks it, a typical home warranty will not cover it. But if your dishwasher door wonât close correctly because the seal has come loose over time, your home warranty may cover it.
The Bottom Line: