If you just recently purchased a home, there’s a very good chance a home warranty was included as part of the deal. A home warranty probably sounds like a great idea in theory. After all, what homeowner likes getting surprised with expensive home repair bills? But many homeowners question whether or not home warranties really are worth it. If you’re debating whether or not to get a home warranty or whether to keep paying for one, here’s what you need to know about them.
Read Your Agreement Carefully
First of all, it’s important to understand exactly what your home warranty does and doesn’t cover. According to Angie’s List, home warranties are some of the lowest rated categories on their site and a big reason why that is is because a lot of people are unclear about what’s covered and what isn’t. There are a lot of things home warranties don’t cover, so make sure you pay very careful attention to your policy’s inclusions and exclusions.
The Difference Between a Home Warranty and Homeowners Insurance
A home warranty typically covers specific systems and features of a home, like certain appliances, plumbing and electrical systems, the water heater, and heating systems. You can also get a home warranty with extra coverage for things like a swimming pool, septic system, or a central vacuum. On the other hand, homeowners insurance covers the interior and exterior of your home if they’re damaged during something like a fire or a storm. Homeowners insurance also covers your personal belongings if they’re stolen and helps cover damages if someone is injured on your property.
A Home Warranty Doesn’t Necessarily Mean Free Repairs
The annual premium of a home warranty can easily set you back a few hundred dollars, with the exact cost varying depending on the level of coverage it offers. However, that’s not the only cost involved in having a home warranty. Even though home warranties are supposed to keep you from being blindsided by huge bills, that doesn’t mean you won’t have any out-of-pocket expenses. You have to pay a service fee anytime someone comes out to your home to fix something. Your service fee would be less than the full cost of the bill, but it’s still something to keep in mind.
The Pros and Cons of Service Calls
When something that’s covered by your home warranty breaks, you contact your warranty company and they make arrangements for someone to come out and fix it. This system has its advantages and disadvantages to it. On the plus side, you don’t have to spend the time finding someone on your own, which is great if you’ve got a busy schedule. However, this also means that you don’t have any say over which contractor comes out to your home. Many people who have had repair work done through their home warranty have said they weren’t happy with the contractor or the quality of work they did.
If you have a home warranty, it’s extremely important to make sure you regularly maintain anything your warranty covers. If a warranty company feels like a service call could have been avoided with proper maintenance, there’s a good chance they’ll refuse to pay for it. Since home warranties are commonly offered when a person buys a home, be aware that there’s a chance that you might get stuck holding the bag because of a problem caused by the previous owner’s lack of maintenance. What counts as “proper maintenance” can also be highly debatable. And when you stay on top of maintenance, that means you might end up going a long time without having to use your warranty, which makes many people feel like they’re better off not dealing with a warranty and just putting that money into a savings account each year.