Protect Your Home – Are Home Warranties Really Worth It?
Different experts will have varying opinions on the value of taking out a home warranty.
It’s one of those things that are marketed aggressively towards new homeowners, but there’s always a ton of confusion as to whether or not it’s necessary, or figuring out the type of warranty worth investing in.
You need to protect your home, and take out a policy to help cover urgent issues as they arrive, but understandably, the market is swamped with different things that may or may not necessarily fit your needs.
This brief primer will help you make sense of all the noise out there, and find out whether or not home warranties are worth the hype.
Home Warranty or Insurance
The first issue that tends to come up is when people confuse home insurance policies with home warranties.
A warranty isn’t the same as insurance. The function of the former is to act as a kind of contract between the homeowner and the company to help provide assistance when certain parts of the home fall into disrepair, such as the heating, or HVAC system, plumbing, and electricity, and so on.
Warranties can also cover problems that come up with major appliances like the fridge or swimming pool. In general, the warranty will help replace or offer repairs at a discount if one of the things listed here stops working properly.
Insurance will cover major events like fires or flooding, so it’s rather different.
What to Expect
The passage above covers in broad terms the sort of things a home warranty can help with. When it comes to how much you should expect to pay for a home warranty, especially if there are any repairs you need to be covered, that might be another ballgame to consider.
Most home warranty plans will cost roughly a couple of hundred dollars a year, paid upfront.
Here in Colorado though, home warranty providers suggest that if you’re facing any repair or replacement costs, you can take the time to choose a suitable warranty plan; there are some out there that ensure you don’t have to worry about the financial cost of appliance failures at all.
You may qualify for installment plans, but that’s not always a given, so you need to choose wisely. Also, the cost will vary a great deal depending on the kind of property you have.
A condo or townhouse will be very different from a multi-family home, so be aware of that fact before signing any dotted line.
Benefits
There are a couple of clear-cut benefits when it comes to investing in a warranty.
Namely, it offers you considerable protection against sudden and expensive home repair bills that you may not be able to afford in case of an emergency. This is especially helpful for homeowners who cannot stow away enough money for a rainy day fund, so the warranty is a helpful buffer.
Furthermore, if something happens in your house and you’re covered by a warranty, you won’t have to waste time trying to find a contractor. You already have a team built into the warranty who will be ready to help you should the HVAC system bite the dust, or the electrical system goes haywire.
Warranties are much more useful for those who are purchasing homes that need a bit of TLC and don’t come with newly renovated infrastructure or top-of-the-line appliances.
Keep in mind that warranties can offer coverage your insurance won’t. Much of the decision depends on the kind of property you end up buying, and properly assessing your own needs.