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Like many homeowners, you've probably wondered if you should get a home warranty. You want protection for your home systems, but is it worth the cost? There are mixed opinions about whether purchasing a home warranty is the right choice, and it can be a difficult decision. With the information below, you can decide for yourself if a home warranty is right for you.
What is a home warranty?
A home warranty is a service agreement meant to cover the repair or replacement of systems and appliances in your home. If a covered system or appliance needs fixing or replacing, you make a claim to your home warranty company, and a service provider will come to your home to diagnose the problem and determine how to move forward with fixing or replacing the item.
Why do I need a home warranty if I already have homeowners insurance?
A home warranty is different than homeowners insurance. Although they both offer protection for the home, it is a different type of coverage. Homeowners insurance protects you if your house sustains damage from a fire, lightning strike, windstorm, theft, etc.
What does a home warranty cover?
A home warranty covers major systems and appliances in your home, such as cooling and heating systems, washers and dryers, electrical systems, plumbing systems, kitchen appliances, etc. Many home warranty companies allow you to customize your home warranty coverage by choosing which systems and appliances you would like coverage for.
How much does a home warranty cost?
The average home warranty costs between $350 - $600 per year, depending on the type of coverage you choose. Basic coverage is at the lower end of the range, while more extensive coverage is at the higher end of the range. If you can afford the upfront cost of the home warranty as well as the possible additional service fees, a home warranty is most likely worth it for you. Even though you have to pay a yearly cost for a home warranty as well as additional service fees, this is still likely to be significantly cheaper than fixing your systems and appliances out of pocket.
How much do home warranty service fees cost?
The average home warranty service fee ranges from $50 - $100.
Do home warranties require a home inspection?
Usually, home warranties do not require a home inspection. Many home warranty companies advertise no home inspection to make the process simpler for the customer. However, some home warranty contracts state that preexisting conditions for your systems and appliances aren’t covered. Without showing your home warranty company the condition of your systems and appliances at the time of the purchase agreement, your claims could go unapproved. Consider doing some kind of inspection with your home warranty company to ensure you both know the condition of your systems and appliances at the time of purchase.
Is a home warranty worth it?
The answer depends on numerous factors:
- What experienced home warranty customers have to say
- The reputation of home warranty companies in your area
- The age of your systems and appliances
- Your ability and inclination to do home repairs yourself
- Your desire for peace of mind
- Your budget
What experienced home warranty customers have to say
Ask for a home warranty when closing on a house
Realtor Patricia Vosburgh advises all her clients to include a home warranty with the closing deal. She explains doing this helps with the sell and also ensures the homeowner has coverage in case anything breaks after purchase.
Vosburgh mentions that costly repairs such as an air conditioning system can be upwards of $3,000, so the cost of a home warranty is worth the initial cost. If you’re in the process of buying a home, see if the seller can throw in a home warranty as part of the closing deal.
Find a reputable company
As a home inspector, Michael Marlow has significant experience with home warranties and has had a home warranty for every house he has owned since 2000. Unfortunately, Marlow found out the hard way that not all home warranty companies deserve your business:
We purchased a new construction home in 2003, and about 18 months later (right after the builder’s warranty expired), we started having problems with the HVAC just quitting… Over the course of the next four years, we had the home warranty company send out a tech for the same problem, paying a service call each time, and they repaired it. Mind you it was a different company each time.
When the system finally died in 2008, we called them again, and their service technician reported that the system had been so modified by previous technicians that the system could no longer be repaired. The solution the home warranty company provided me was to give me cash in lieu of repairs, so they gave me $700. It ended up costing me $7,000 to have the system replaced.
Like any industry, not all home warranty companies are trustworthy. Reading online reviews can help you avoid a situation like Marlow’s. The common theme in customer reviews seems to be home warranties are worth it if you find a trustworthy company that will not take advantage of you.
Marlow also reports hearing from past clients that some home warranty companies have claimed preexisting conditions on claims when his inspection report clearly notes that the system was working at the time of the inspection.
Fortunately, Marlow switched home warranty services and now has a more trustworthy home warranty company. If his home inspection says a system or appliance was working at the time of inspection, the home warranty company will not deem it a preexisting condition. He also doesn’t have to worry about the home warranty company refusing to service a system because of previous attempts.
If you find the right home warranty company, you don’t have to worry about dishonest business practices and a company ripping you off.
To avoid any miscommunication between you and your home warranty company, Marlow advises “Read the fine print. Don’t just go by the flyer or your realtor’s recommendation; Get a copy of the full policy and read what is covered and what is not covered.”
Marlow gives us one last tip: “Many real estate offices have a contract with a warranty provider, so that is who they will suggest.” Marlow points out that that particular home warranty provider may not be the one for you, so do your research to find the best home warranty company for you.
Take into account the age of your systems and appliances
Real estate agent and homeowner Ian Bush advises “when deciding if you are going to purchase a home warranty, I think you have to consider the age of the appliances in your home, their typical lifespan, and whether or not you can afford to fix or replace them when they fail.”
Bush has lived in his home for 18 years, so many of his appliances are at the end of their life. He purchased a home warranty to reduce the cost of the repairs and replacements when they fail.
Bush notes that because most home warranty policies include three tries to repair followed by a replacement, it is a relatively inexpensive way to protect your systems and appliances. Having older appliances makes a home warranty worth the investment, and Bush ended up saving significant money and time in the long run.
Average Lifespan of Common Systems and Appliances
Use home warranties for your peace of mind
When asked if her home warranty is worth it, homeowner Carol Gee didn’t hesitate to say “yes.” Gee first had a home warranty as part of a closing gift from the seller of her current home. At first, Gee and her husband did not use the home warranty, and they wondered if they really needed the $350 yearly expense.
Two weeks before the end of her home warranty agreement, Gee walked into her laundry room only to be greeted by several feet of water — her water heater had died. Gee’s husband called the home warranty company to explain what happened and by the following day the technician had installed a new water heater and hauled the broken one away.
Since then, the Gees have used their home warranty for their air conditioning system, furnace, oven, and garbage disposal.
Now that they know how helpful a home warranty can be, the Gees don’t want to be without it, especially now that they are retired and don’t want to worry about unexpected repair costs. Gee happily recommends home warranties to everyone she knows.
Gee sums up her home warranty experience by explaining that home warranties are like life insurance and car insurance: you hope you never have to use them but you are so glad you have them when something goes wrong. A home warranty gives you peace of mind that you won’t be left scrambling when a major system or appliance breaks.
Use Home Warranties for Systems and Appliances You Can’t or Don’t Want to Fix Yourself
Like many homeowners, Debi Goldben is handy when it comes to minor home repairs. However, there are costly and difficult repairs that she does not want to do herself. With major systems and appliances that are difficult to fix, Goldben feels a home warranty is “worth its weight in gold.” Since having a home warranty, Goldben has had numerous major systems and appliances fixed and replaced, saving her at least $3,000.
A home warranty is a great resource because it can take care of all the major fixes you can’t or don’t want to do yourself. Many home warranty companies even offer customizable coverage that allows you to choose the systems you want covered, which ensures you are only paying for the coverage you want.
A home warranty is worth it if:
- You received a home warranty as a closing gift
- You can afford the yearly cost and the possible additional service fees
- You have found a trustworthy home warranty company with good reviews
- You read the fine print and understand exactly what your home warranty entails
- Your systems and appliances are likely to need a repair or replacement within the year
- You want peace of mind knowing your home’s systems and appliances are covered in case they break or need replacing
- You don’t want to or can’t fix certain systems and appliances on your own