Many wonder if home warranties are actually worth it. To come to a conclusion, what needs to be established is:
- How much the warranty costs
- What company is providing the warranty
- What the warranty covers
In Utah, a warranty that provides the highest amount of coverage will cost around $450. This includes homes that are 5,000 square feet or smaller. Depending upon which company is providing the policy and what is covered will largely determine whether it’s worth the cost.
For an illustration, let’s imagine you purchase an older home in the middle of the winter. Due to the winter season, you were unable to inspect or test the home's air conditioning system. As the seasons change, you turn on the A/C only to find that air is blowing but it’s certainly not cold.
Thankfully, you purchased a home warranty right? Unfortunately, there is always fine print attached to those warranties! All companies will charge some inspection/service fee to determine if the problem can be fixed or not. The fees range in price from $50 - $70. Depending upon the stipulations of the policy, if a new A/C system is needed, it might not be covered. Additionally, the policy might not even cover the repair if the problem is deemed “pre-existing”.
So yes, you might have paid for a warranty that doesn’t cover what you thought it would and you will be stuck footing the bill.
An A/C repair cost could run as high as $800-900 and a replacement of the whole system could run $1500-$2500. There are some warranties that will cover up to $500 and you are responsible for covering the rest. However, other companies will cover the repair and/or replacement and not think twice about it. So, again are home warranties worth it? Yes, if you get the right company with a policy that will cover all you think it will. I would advise reading the warranty sales brochure in detail before making a decision. I would also consult with my real estate agent because they might also have experience with different types of home warranties.
A good warranty could certainly cost you more, but in my opinion they are well worth it! For more of my thoughts and insights on real estate take a look at my blog at Park’s Edge Park City.