Depending on who you ask, home warranties are a waste of money or a wise investment. Why is there such a wide range of opinions? It is because home warranties have both pros and cons. Let’s cover some of the points for and against home warranties before sharing a few tips for saving on such a warranty.
The Pros of Home Warranties
Home warranties can save you from major repair bills. You’ll probably have to pay a token amount for any service calls. You may be required to pay a portion of the cost of replacement equipment. Home warranties are invaluable if you’re bad at managing money. You’re required to pay the premiums every month, quarter or year, offsetting the money you’d otherwise need to save each month to cover the eventual cost of appliance repairs.
Home warranties provide peace of mind. You’re less likely to have to pay a steep repair bill because of the warranty’s coverage. It also pushes you to maintain the equipment. This reduces the odds that the equipment will suffer a major failure, too. A home warranty equals fewer unplanned major expenses. Warranties could save you money in other ways. For example, it may give you a discount on repair services or new equipment purchases. Or it may give you access to a 24×7 customer service team to help you troubleshoot issues that you can take care of yourself before calling in a qualified pro for repairs that you can’t do yourself.
The Cons of Home Warranties
A warranty on your home is an additional cost. You have to pay this on top of the cost of your homeowner’s Insurance. When you have a warranty on your home, you may not be allowed to select the make and model of the replacement equipment. The warranty company and the repairperson make that decision, though the homeowner may have some input in it. If you fail to pay the premiums, you’ll lose coverage. Conversely, if you put that money in a savings account, it is still there as long as you don’t spend it on something else.
Tips for Making the Most of Home Warranties
Understand what the warranty covers before you sign up for it. Don’t assume that your pool pump, sprinkler system, home dehumidifier or other items are covered. Know what is covered so you can determine whether or not you need an additional rider to cover items you’re afraid will break down. Learn the pricing system. Don’t make a decision based on just the premiums. What do you have to pay for service calls? How much does the warranty company pay towards repairs and equipment replacement? You don’t want a warranty that pays for maintenance but does nothing to trim the cost of the several thousand dollar repair bill for a broken and then replaced HVAC system.
Understand that home warranties are generally voided by trying to repair things yourself or failing to maintain the equipment. Don’t expect the warranty to cover the cost of a new air conditioner if you haven’t replaced the air filters. If you weren’t clearing out the dishwasher drain or calling in a minor leak, they may not pay for the cost of the flooded control board or ruined unit.