When is a home warranty worth it?
Is a home warranty worth the cost? Natalie Cooper thinks so -- she's getting plenty of use out of her home protection plan, making it well worth the $600 annual charge.
After buying a home in a suburb of Columbus, Ohio, seven years ago that came with a three-year home warranty, and extending it since then, she and her husband have used it to fix their washing machine, garage door opener, refrigerator, toilets, replaced an air conditioner and had an electrician come out to do some work.
Cooper, who owns an Best Quote Insurance in Columbus, says the services might not have met the amount paid in premiums every year, but over seven years they’ve added up to thousands of dollars more than the home warranty cost and what they would have spent on their own for repairs, even with a $75 service call fee.
Deciding if a homeowner's warranty is worth buying can require comparing many factors. Here are some to consider:
What does a home warranty cover?
The point of getting a home protection plan is to cover home repairs when needed, and not all homeowner's warranties cover the same things. Home warranty coverage is like insurance, offering repair or replacement of old appliances or home systems such as HVAC.
Homeowners with an older house will likely be interested in home warranty plans that cover more things than a newer home would need — such as older appliances — and will likely pay more for it. If you just bought new appliances and have a manufacturer’s warranty for a year or more, you won’t need such coverage. If you have new appliances, you may be able to exclude those from your home warranty coverage and get a cheaper price.
Things that can be covered by home warranty insurance include ductwork, electrical, plumbing, dishwashers, refrigerators, ovens, stoves, clothes washers and dryers, and water heaters.
Things that are unlikely to be covered include expensive items such as septic tanks, wells, heating systems, pools, garage doors, windows and doors, sprinkler systems, pre-existing conditions and walls. Coverage for such items may cost more. Roofs may also be exempted, though some home warranty companies sell plans to fix leaking roofs.
“The best way to understand what the warranty covers is to go straight to reading the exclusions,” Cooper says. “Don’t expect it to cover everything, but other than a few instances, the warranty company will pay for it to be fixed. If they can’t fix it, they’ll replace it. If the warranty you’re looking at doesn’t have any type of replacement coverage, don’t purchase it and look for one that does.”
Some home warranty companies won’t cover problems that exist before buying a policy. If your AC unit is already broken, don’t expect the warranty to cover repairs when a warranty takes effect.
Home warranty cost
Another big factor in deciding if a home warranty is worth buying is its cost. Basic coverage can start at about $300 and go up to $600 or more.
Some home warranties charge for a service call, such as $75 or so, while others allow unlimited service calls. Contractors are screened and sent out by the company.
To determine if a home warranty cost is worth it, start by learning how old your appliances and home systems are and if the original equipment manufacturer warranties still cover them. Find out what the expected lifespan of each item is to help you figure out if a home warranty is needed.
Some home warranty companies require annual maintenance on appliances and home systems to keep the warranties valid. Some may ask how long you’ve had them. Don’t expect the home warranty company to pay for the annual maintenance of your appliances or home systems.
Read the contract carefully to make sure that old appliances are covered in the home warranty. Some don’t cover old appliances, such as anything more than 10 years old.
Home warranty service
When considering home warranty companies, look up home warranty reviews online and look for how happy customers are with their service. Does the company have a quick turnaround time? Does it offer online and phone support? How easy is it to get something fixed quickly on a weekend?
Cooper says that late at night on a weekend a few months after moving into their home, heavy rains left an inch of water in their basement when the sump pump didn’t work. They called the warranty company at 11 p.m. and one hour later a plumber arrived at their home to fix the problem. He snaked out their drain pipes to the street, clearing out roots that were plugging the pipes. The repair only cost the Coopers the service fee of $60, which has since gone up to $75.
It’s also worth asking how to resolve a dispute about a home warranty claim. See what the company's policy is in such cases and what their dispute resolution process is.
Home warranty transfer
It’s common for home warranties to be transferred to new homeowners after a home sale, but be sure to ask if any remaining coverage will be transferred at no cost. A home warranty can be an important selling point that helps the home sell faster and at a higher price.
Even after a home inspection, homebuyers can get peace of mind for at least the first year of living in their new home by buying a home warranty. Often the home seller will buy it for them.
After that, the $600 or so to buy a home warranty for a year could be a worthwhile cost if it leads to a peaceful night of sleep.