Home Warranty Advice: Are They Worth the Money?

If you own a home, you may be more tempted to purchase a home warranty to help avoid the financial surprise of an unexpected repair. But do home warranties truly offer the peace of mind they claim on the brochure? Will purchasing a home warranty cover an air conditioner that gives out mid summer, or a water heater that leaks and turns your basement into a swimming pool?

The answer is: maybe.

The real value of a home warranty, and how much will it help if something goes wrong, depends a lot on the age of your house. The older the home, the better the chance of saving on system repairs and replacements. But the devil is in the details as many home warranties exclude coverage for elements it deems old or that have a high risk of costly repair. Of course, this is exactly why you might consider buying one!
To help you determine if a home warranty is worth the cost, read the advice listed below:Alt= home warranty adviceHome Warranty Advice: Are They Worth the Money?
What is included in the home warranty: Warranties for existing homes aged five years or more cover normal wear and tear rather than pre-existing conditions. Interior plumbing, HVAC, electrical systems, kitchen appliances, water heaters and electric garage door openers are usually under the coverage umbrella, with the option of adding coverage for such items as swimming pools. Basically service contracts, home warranties specify how issues will be addressed and who will handle repairs and replacements in the event of a problem. The coverage agreement may also include standards for homeowner maintenance, so be sure to keep careful records of your home care routine. 

Home warranty covered verses non-covered costs: Most warranties specify out-of-pocket costs to the covered party, such as fees for service visits or deductibles.

How long home warranty coverage lasts: A warranty for an existing home typically lasts for a term of one year from the close of the property sale, and is usually renewable by the homeowner before that year is up.
To renew or not to renew your home warranty: This is the big question for many homeowners who receive the bonus of a warranty with their new-to-them home. The best advice would be to carefully assess your home’s systems and components, because age has everything to do with the likelihood of having a breakdown covered by the policy and thus the potential for saving on repairs and replacements. The $200 to $600 cost of a year’s coverage becomes a sweet deal if your home ends up needing a new furnace or other big-ticket item during that time.  
Alt=Home Warranty Advice: Are They Worth the Money?Home Warranty Advice: Are They Worth the Money?Home warranties are also on the way to becoming a standard element of the deal in existing-home sales. Not a requirement as with new builds, they’re instead a way for sellers to sweeten the deal by offering peace of mind to the buyer and protection for themselves after the sale.
Bottom line…as a former professional home inspector who has seen the impact of age on mechanical systems, the best advice I can give is to insure yourself by starting a household saving account to cover unexpected repairs. Take the same bet that the warranty companies do: you’re not likely to need as much money as you put away.  The difference is, of course, that you get to keep what’s left over.

0 thoughts on “Home Warranty Advice: Are They Worth the Money?

  1. I have an AHS policy, currently my central air is not working. 9/9/10 I put in a service request. The service provider came out 9/10/10. Now I’m being told the fan motor that was ordered for the repair has to be manufactured. It is now 9/24/10. The only way I’ve been able to get information on the repair is to call the service provider and notify AHS. Neither the service provider or AHS has contacted me to let me know what is going on. At the very least, you would think a rescue fan motor would be installed until the proper one is available, but the customer needs are not the priority.

  2. My experience with home owner warranty policies is less than pleasant. Perhaps buying a policy the first year you own the home make sense, but not after that, regardless of the “risk” of a major appliance problem. I have a policy through Global Home USA and have waited (still waiting) four days for a service call on a broken down air conditioner. Global Home told me repeated lies, saying the service order had been given to three different companies which denied ever receiving it. Service providers tend to push these warranty calls lower on the priority list because they get paid less which is understandable, but having the warranty company repeatedly lie is another problem entirely.

    Take the $400-500 you would spend on a policy and bank it for future home repairs. At least you have control over using that money. I have no control or recourse in my case.

  3. I purchased a bank owned home in April 2009 and my 1year home warranty was paid for by the bank. I only pay a $55.00 deductible for each request that my warranty policy covers and the repairs and materials are covered as policy stipulates. I’ve used my coverage 4 times since purchase for electrical wiring issue, phone wiring, appliance repair and plumbing my cost $220.00 saved $$$$. Well worth the investment for me.

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