A home warranty protects your home’s appliances and major systems against breakdowns. For a few hundred dollars to a couple thousand dollars a year, major appliances — such as your refrigerator, washer, dryer, stove, HVAC, and electrical system — can be quickly repaired within a day or two at pre-negotiated rates.
It’s a good deal if your home might be prone to breakdowns or if you’re looking for peace of mind and financial reassurance. However, a home warranty usually doesn’t cover anything more than your home’s appliances and systems, and even ostensibly covered appliances or systems could be excluded from coverage if certain conditions aren’t met.
If you’re looking to protect your home against risks, such as a fire or burglary, you’ll need homeowners insurance, which is a similar but different type of coverage.
Here are the pros and cons of getting a home warranty.
Pros
Reassurance of Knowing You’re Protected
A key benefit of a home warranty is peace of mind, knowing you're protected from unexpected breakdowns. If your fridge stops working or your air conditioning breaks down, you won’t need to scramble to find and pay a repair person at a premium rate. Most home warranty companies dispatch repairmen within 24-48 hours, which is particularly valuable in areas with high demand for service technicians. This could be the difference between a quick repair or waiting a week for an opening.
A More Enticing Home Sale
For sellers, especially if the home is older or has appliances with significant wear, offering a home warranty can ease a buyer’s concerns. It’s common for sellers to include a year of home warranty coverage for buyers, but terms like transfer fees and the length of coverage often require negotiation. Overall, a home warranty can sweeten the deal for prospective buyers.
Easier Budgeting
Without a home warranty, unexpected repairs—like replacing a dishwasher or HVAC system—can strain your budget. A home warranty locks in repair costs, with fees typically around $100, depending on the work. For homeowners on a budget, this predictability provides significant peace of mind.
Cons of Home Warranties
Exclusions: Home warranties don’t cover catastrophic damage, such as fires or major structural failures. They also typically exclude issues from lack of maintenance or manufacturer defects.
Not Useful for All Homes: A home warranty doesn’t make sense for new homes, which are usually covered by builder and manufacturer warranties. Likewise, very old homes may have appliances that are too difficult to repair, making coverage less practical.
Loss of Control: Home warranty companies usually work with specific contractors, meaning you can’t always choose your preferred repairman. If you go outside the warranty’s network, you’ll pay out of pocket. Warranty companies also prioritize repairs over replacements to minimize costs, which may not always align with what the homeowner prefers.
Renters
Renters cannot purchase home warranties, though landlords may buy them for rental properties. However, tenants will need to coordinate repairs with the property manager or landlord.
Conclusion
Home warranties are best suited for homes that are neither brand new nor too old and offer reassurance for budgeting repair costs. However, there are limitations to consider, such as coverage exclusions and reduced flexibility in choosing repair providers.
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