Is A Home Warranty Worth It?
As home warranties continue to grow in popularity with homeowners and homebuyers, the question is often asked ‘Are home warranties worth the money?’. The answer depends on your unique situation and the company you are purchasing your home warranty from. However, you must first know what a home warranty is.
What is a home warranty?
There is often confusion over whether a home warranty is a substitute for home insurance. I am here to tell you, it is not. In a home warranty policy, the company agrees to pay for certain components of the home should it break down. Some common examples are discounted repair and/or replacement for plumbing, air conditioning, and appliances. At an additional cost, you can choose to have your plan cover a wide variety of extra coverages.
If a breakdown occurs, the homeowner will call the home warranty company to file a claim, and the company will send one of its contracted service providers. The homeowner may or may not have to pay for the entire repair up front with a subsequent reimbursement. Again, this depends on the home warranty company. However, there typically is a service fee that must be paid.
How much will a home warranty set you back?
The price of a home warranty depends on the type of property you have purchased. For instance, the price of a warranty for a condo will differ from that of a single-family detached home. The warranty will typically set you back a few hundred dollars each year to be paid up front or with installments if the company allows.
Something else to keep in mind, as mentioned above, is that there is a service fee that is charged when a service provider is requested to come out and examine the issue. There is also the cost of repairing items that are not covered by the home warranty and the possibility that a claim can be denied by the company.
A home warranty offers the benefit of saving homeowners money from unexpected repairs, but they do come with their own set of drawbacks. Homeowners shopping around for a home warranty should always thoroughly read their contract and consider whether the price is worth it or not.