Are Home Warranties Really Worth It?

hands protect paper figures Are Home Warranties Really Worth It?

Investing in a home warranty can be challenging, especially considering the financial costs associated with it. Our cost of living is usually minimally defined as the rent/mortgage paid on our house, energy bills, food, clothing, and transport expenses of going to work or school for kids. An essential aspect of this cost of living is the cost associated with performing necessary repairs and providing home maintenance. Such maintenance effort is required regardless of whether you own or rent your home.

Discovering if home warranties are worth it can be answered with a few simple questions. These questions range from you being a DIY person to having the necessary expertise to perform repairs around the home, and so on.

Considering your predicament and the home you’re living in will tell you whether to invest in a home warranty or look at repair & maintenance as a case-basis job. Your home is quite a significant investment on your part, and taking the necessary steps to ensure its upkeep is to protect this investment. 

An article by Cinch Home Services advocated for buying home warranties that cover home furnaces as it outperforms having to cover repairs and maintenance on a case-to-case basis. This article will delve into a holistic argument on whether such home warranties are worth your time.

What is a Home Warranty and How it Works:

A home warranty is a service agreement between the provider and the buyer where the service provider offers repair and maintenance services at a fixed and variable cost. Like an insurance policy, you have coverage limits and exceptions and a service fee for each repair performed.

Claiming for a service is simple: you put the nature of the service required on an online portal, and the service provider will send an expert technician. Home warranties normally exclude a few standard items, such as structural abnormalities, normal wear and tear, and improperly installed items. 

What is the Cost of a Home Warranty?

The home warranty cost depends on various factors, some of which will be discussed below. These factors affect the amount of service fee calculated per job, the monthly payments, and exclusions in the home warranty agreement.

Typically, the warranty plan can range between $300 to $700, depending on the factors discussed below. Apart from an annual fee, there is also a difference in fees for home appliances such as air conditioners, HVAC systems, and refrigerators. 

When to Buy a Home Warranty?

There are a few indicators that will give you a better idea if investing in a home warranty is worth your time:

Age and Condition of Home Appliances and Systems:

In case you have brand new home appliances, having a home warranty will add little to no value as the appliances already have the requisite warranties. Older appliances with constant need of repairs are a stage where you must consider having a home warranty as a holistic approach towards repair & maintenance of your appliances.

Budget and Risk Tolerance:

Home warranties bring with them some predictability and stability with regard to your costs for the repair and maintenance of home appliances. A home warranty includes an upfront fee with additional service charges for each repair performed. With home warranties, you won’t be surprised by out-of-pocket expenses on repairs and maintenance, as you can plan for such requisite repairs. 

Type of Coverage:

Some home warranties provide more coverage than others, while some can have many exclusions. The critical point is your needs versus the home warranty, as one warranty may not cover HVAC services. If you have a new HVAC system under warranty, this home warranty will not be harmful.

Reading the contract and description of the provided services is a must to ensure you have access to all the required services.

Research and Reviews:

The modern online world contains user reviews and feedback regarding different products. Home warranties are no different; you can read about them online and select the most suited to your needs. You should always consider a reputable service provider instead of the cheaper option. 

Cost-Benefit Analysis:

At the end of the day, it all comes down to the cost of the home warranty in question. The home warranty should give you more benefits than you can have by paying out of your pocket. If occasional repairs that you foresee cost less than maintaining the home warranty, it will not be viable to consider buying one. However, this is a tough question that requires some financial forecasting, and you must make a calculated decision on whether buying a home warranty is beneficial or not. 

Ultimately, the decision to purchase a home warranty depends on your individual circumstances and priorities. Some homeowners find peace of mind in having a warranty, while others prefer to handle repairs and replacements independently. Online reviews and careful vetting of service providers and their respective services can help you formulate a better decision in this regard. 

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