The Real Reason People Are Scared of Home Warranties


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Written by Chad Zollinger | Last Updated February 24th, 2020
Chad Allen Zollinger is a Content Management Specialist for Best Company. Majoring in Writing Studies, Chad is an avid reader, a lifelong writer, and once completed the Rubik's Cube in 34 seconds.

Modern kitchen

With recurring expenses like warranties, most homeowners focus on two things: risk and necessity. Most people assume that home warranties are both risky and unnecessary, simply because they aren't often required for obtaining loans.

New homeowners end up asking themselves certain questions: Why get a warranty when I have insurance? Do home warranties even help? How much risk is involved in home warranty? Weighing risk and necessity is important when deciding which home warranty to get, but don’t let sales pitches cloud your judgment. Learn how much risk is involved in home warranty and whether you should consider investing.

Is It Risky?

Home warranties cover major appliances and home systems (heating, electrical, cooling, plumbing, etc.) that break down due to age or normal wear and tear. This means that you are guaranteed to need and use coverage. As for the question of how much risk is involved in home warranty, there is actually much higher risk in not having one. Without home warranty coverage, you are gambling that your appliances will outlast their own money value; this is a common risk that most people take. Eventually, your home appliances will break — the question will then be how will you pay for it?

The only risk about getting a home warranty plan is choosing the wrong company. Yes, a bad warranty company is one that fails to cover its clients at the time of need. But the fact is that it all depends on the company itself. When researching companies that offer appliance coverage, you should be asking yourself if the company has a high claim approval rate, if past customers were happy with their services, and if the company has had a history of negative or positive business practices. For example, Landmark Home Warranty tracked the total amount of claims it approved over a 12-month period and found that it had approved 94 percent of all of the claims it received.

Is It Necessary?

Most people question the necessity of home warranty plans because they are rarely required by banks for issuing mortgages. They are often dismissed as “unnecessary” because of the popularity of homeowners insurance. However, it is important that homeowners understand the difference between homeowners insurance and a home warranty. Homeowners insurance covers accidental damage to your home and possessions; it usually covers home interior and exterior, and possessions in case of theft. It’s also usually mandatory for taking out a mortgage — this is why people brush home warranties aside. Though they aren’t mandatory, a home warranty will likely be used more than homeowners insurance.

Both homeowners insurance and home warranties are great to have, but try not to mistake the usefulness of one as the uselessness of the other. There are many great options for people looking to save money on home repairs, so research all possible options. Whatever you do, be certain that the company you choose is both fair and honest. If you are interested in a home warranty, check out these top home warranty companies. Your appliances will not last forever; you can either pay the full price for broken or outdated appliances yourself or you can purchase a home warranty, which will cover the price when the time comes.

The Top Home Warranty Companies

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#1 Choice Home Warranty chevron_right
8.6 Overall Score
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#2 Landmark Home Warranty chevron_right
8.3 Overall Score
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#3 First American Home Warranty chevron_right
7.5 Overall Score

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