Should I Buy a Home Warranty? Pros and Cons

When buying a home warranty, it's essential to understand what it entails. A home warranty is a service contract that covers the repair or replacement of major home systems and appliances. But is it worth the investment? Let's dive into the pros and cons of home warranties to help you decide.

Home warranty cost

A crucial factor to consider when contemplating a home warranty is the home warranty cost. Here's a breakdown of the expenses associated with a home warranty:

• The average cost for a home warranty is about $50 per month, or $600 per year; it may be more or less depending on the coverage you select.
• Most home warranty companies charge a service fee, typically $75 to $125, for each repair visit.
• Optional add-on coverage for specific items like pools or septic systems may increase the overall cost.

Understanding coverage

It's essential to know what a home warranty covers to determine if it's right for you. Home warranties generally cover:

• Major appliances: Refrigerator, oven, dishwasher, built-in microwave, washer, and dryer.
• Home systems: Heating, air conditioning, electrical, and plumbing.
• Some home warranties also include coverage for items like garage door openers, ceiling fans, and doorbells.

Keep in mind that coverage can vary depending on the plan and provider, so always read the fine print.

Homebuyer Warranty

A homebuyer warranty can provide peace of mind to new homeowners. Here's how:

• A homebuyer warranty is typically offered by the seller or builder as an incentive for the buyer.
• It covers the same systems and appliances as a standard home warranty.
• A homebuyer warranty usually lasts for one year, after which the homeowner can decide whether to renew the coverage.

Insurance vs. Warranty

Homeowners insurance vs. home warranty is an important distinction to make. There are some subtle but important differences:

• Home insurance protects your home's structure and personal belongings from damage due to events like fire, theft, or natural disasters.
• A home warranty covers the repair or replacement of major systems and appliances due to normal wear and tear.
• While home insurance is often required by mortgage lenders, a home warranty is optional.

The Pros

Now that we have some definitions and know what’s required and what’s optional, we can weigh the options. A home warranty comes with important pluses for many homeowners:

1. Financial protection: A home warranty can save you from unexpected expenses related to home repairs.
2. Convenience: Warranty providers have a network of professional technicians, simplifying the process of finding a reliable repair service.
3. Peace of mind: Homeowners can feel more at ease knowing that their essential systems and appliances are covered.

The Cons

Despite the benefits, no warranty can provide your home with 100 percent protection, and many warranties come with specific restrictions. Here are some drawbacks to consider:

1. Limited coverage: A home warranty may not cover all items, and pre-existing conditions or improper maintenance can lead to denied claims.
2. Additional costs: Homeowners may need to pay extra for add-on coverage or items not included in the basic plan.
3. Lack of control: Homeowners may have limited choices when it comes to service providers and replacement options.

Final Thoughts

Deciding whether or not to invest in a home warranty depends on several factors, such as the age of your home, the condition of your appliances, and your financial situation. Weigh the pros and cons, consider the home warranty cost, and understand what’s included in home warranty coverage to make an informed decision.