Have you bought a new home and you are in a dilemma on whether to get a home warranty or not? A home is one of the most expensive assets many people will ever own. Besides the structure, it is equipped with costly household appliances such as air conditioners, plumbing systems, dishwashers, and many more. Whether new or refurbished, all appliances are subject to breakdown at some point, and you’ll be forced to dig deep into your pockets to pay for the repairs if you don’t have a home warranty. Therefore, the answer to this question is often a resounding yes.
A home warranty is simply a safety plan covering the repair expenses and replacement of significant household equipment whenever there is a failure, consider it insurance for your new home’s appliances. It’s important to note that a home warranty only covers some home appliances. Therefore, it is essential to opt for a plan covering your major household appliances such as refrigerators and cooking gadgets such as your stove. Though there are similarities between a home warranty and your required homeowners’ insurance, the two differ in many aspects. A homeowners’ insurance policy provides cover against unforeseen losses or damage to your home and its possession. It won’t step in; in the event your refrigerator or furnace stops working.
Simply put, a home warranty is a formal agreement between a homeowner and a home warranty provider to offer a cut-price repair and replacement service on a home’s critical appliances like electrical systems, HVAC, furnace, among others. It’s worth noting that homeowners’ insurance covers none of these components. If these components were covered in the insurance policy, it would be costly because they attract a significant service fee.
Home warranty providers have a working partnership agreement with certified service renders. When a component that is covered by a home warranty stops working, the homeowner notifies the home warranty provider, who sends one of its services renders to scrutinize the fault. If the provider ascertains that the required repair or replacement is part of the warranty, the fix the problem. However, the homeowner will be required to fork out a small service fee, plus the money incurred to shop for the warranty.
Home warranty basics
A home warranty costs hundreds of dollars annually, paid beforehand, or in installments if the warranty provider provides such a payment plan. A plan’s cost depends on several factors such as property type, type of plan—extended or basic, etc.
The warranty cost isn’t influenced by property age and home’s square footage unless under special circumstances. Home warranty basic policy doesn’t cover detached structures like guest houses but can be covered for an extra fee.
Having a home warranty doesn’t exempt homeowners from spending money on repairs. Since not all the problems are covered by the warranty, or the homeowner didn’t shop for coverage for a specific item, he or she will have to dig deep into his pockets to finance the repair. Besides, home warranties exclude items that have been poorly maintained from coverage. Also, a homeowner will have to pay entire repair costs if the warranty provider dismisses a claim.
With that in mind, let’s look at the pros and cons of buying a home warranty for your new home.
Pros
- Peace of Mind
We’re all not prepared to fork out a considerable fee for a major repair, especially we spend a significant part of our savings on a down payment. For instance, a breakdown of an air conditioner compressor can cost thousands to repair.
With a home warranty, more of the risk will be covered by the provider. You’ll only pay a small service fee.
- Convenience
In normal circumstances, when something breaks in your home, you usually spend time figuring out who to contact to redress the problem. With a home warranty, you’re exempted from that step. Instead, you need to call your warranty provider. They will examine the issue and send an expert to fix it.
- Discounted Service Calls
One of the significant advantages of home warranties is a discounted, flat-rate fee for service calls that aid homeowners to save a considerable amount over the common expenses of repair visits. Service expenses can be cut further when contract upgrade options are picked.
- The Prospect of Improved Coverage
Many home warranty companies offer customers a variety of program choices. For extra fees, basic warranties can be upgraded to cover repair or replacement of other expensive appliances such as swimming pools, numerous air conditioning units, and even spas. Furthermore, the policies can be expanded to cover underlying conditions that existed before the policy was effected.
- Significant Savings on Common Repairs
Basic warranty policies cover replacement or repair of numerous appliances and systems that develop problems often. Some of these appliances include electric systems, kitchen ranges, and plumbing fixtures.
Cons
- Service Uncertainty
If you obtain a warranty from a trustworthy provider, you’ll rejoice, and if you fall into the hands of a deceitful provider, then you are bound to be frustrated. Some service providers respond quickly when called upon, while others take days to respond, which can be a nuisance. The quality of work also varies from one provider to the other.
- Limited Control
As a homeowner, you have little control over repair decisions. It’s not your onus to determine who carries the repairs, the type of brands preferred when replacing items, and the exact time when the repair should be done. Generally, your replacement will be in the resemblance of your existing appliance. However, you can choose to pay an additional fee for an advanced brand.
- Service Call Fees
Even though home warranties cover a substantial amount of repair expenses, it doesn’t cover it inclusively. Usually, when a problem arises, you’ll be required to pay a service fee that can range from $50-$100. If the situation demands multiple technicians’ attention, you will be required to pay a service fee to all of them.
- The Policy Only Belongs to the Homeowner
Home warranties only cover the homeowners, and it will not cater for any loss if you rent your home. Unluckily, renters usually lack the financial power to purchase homes, and that’s why they opt to rent.
- Warranties May Cover Repairs Rather Than Replacements
Contractors are out there to save time and money on your home; therefore, they may opt to repair problems rather than replace faulty items like electrical systems and air conditioners. Since repairs provide a short-term solution, the problem might keep recurring from time to time, resulting in more expenses.
Summary
A home warranty is not an ideal remedy to the perils and undisclosed costs homeowners encounter. If a seller decides to give one, it won’t harm. Before purchasing one, please read the terms and conditions of the home warranty before entering into a contract, and carefully evaluate whether it is worth the value.
Since home warranties have pluses and minuses, it is crucial to do your research before getting into a contract. It’s good to choose reputable providers who will pay for legitimate repairs when called upon. The best time to buy a home warranty is when you are getting into a new home.
The discussed above pros and cons will help you to make an informed decision when deciding whether to buy a home warranty for your new home or not.