Home Warranty

What are the pros and cons of a home warranty?

Home Warranty

Having a home warranty could be a safety net for you and your family as this type on warranty can safeguard against expensive unforeseen repairs. In this article I will help you find out if it is really worth it and if it is what homeowners really expect.

A home warranty is usually purchased when you buy a home. It is an additional safety net to cover what a typical homeowner’s insurance does not. A home warranty provides for discounted replacement and repairs. It is a contract between the homeowner and the home warranty company. It covers a home’s major components such as furnaces, HVAC, plumbing, electrical systems, and appliances. It can also cover swimming pools. Most homeowner’s insurance does not cover these types of repairs or replacements. Sometimes, to give home buyers peace of mind, a home seller may offer to purchase a home warranty on behalf of the buyers for a year.

Home warranty companies do have strict rules. Often, they have agreements with approved service providers and you will need to go through their company for replacements and repairs. A home warranty can typically cost several hundred dollars a year. You can choose to pay it up-front or as installments such as quarterly or twice a year. The cost depends on the property type such as a single-family residence, townhome, or condominium. Age of property is not usually a factor where price is concerned. If the home is brand new, the cost can increase. Square footage is also not a big factor in price of warranty. Detached property is not usually covered but you can add it to the policy.

Most home warranties will charge a service call fee if they need to go out and do repairs. This can range from $75-$120 per service fee call.

Home warranty may not cover components that have not been properly maintained. This is all the more reason to stay on top of your home maintenance and cleaning yourself. However, if previous homeowners did not properly maintain something, you could pay the price even with a home warranty.

Some of the best benefits of a home warranty are peace of mind. It provides reassurance to home buyers and helps new home owners who may have just depleted their savings to buy a home.  If a homeowner does not have an emergency fund for these types of expenses, this will be a big help. It can act as a buffer to financial burdens. This can also free up your emergency fund for other emergencies that may come up. 

Here are the pros of a home warranty:

  • Reassurance to buyers.
  • Peace of mind.
  • Cover most repairs and replacement that is not typically covered on a homeowners insurance policy.
  • Can be a safety net for unforeseen expenses.
  • Covers furnaces, HVAC, plumbing, electrical systems, water heaters, appliances, and swimming pools.
  • Sometimes a seller will offer to pay for the first year.
  • Can be inexpensive compared to paying for repairs and replacements on your own.
  • Eliminates the need to find service contractors.

Here are the cons of a home warranty:

  • Will not cover items that have not been properly maintained under the improper maintenance clause.
  • Service repairs or service calls cost $75-$125 per call.
  • Neglect from previous owners may limit replacement.
  • Eliminates freedom to choose your own independent contractor for repairs.
  • Is not a perfect solution but can help and add peace of mind if you are looking for additional coverage for your home.

Don’t forget to read the homeowner’s insurance page for more information on how to protect your home from damage and repairs.

If you are looking for a home warranty plan, please contact me at (562) 521-0240. I can help provide you with contact information to a reliable company.