Arizona is an interesting place to live.
While 80% of the nation shivers in the cold, here, it’s sunny and dry, with
temps in the 70s. By June, though, it’s our turn to suffer. In Phoenix, Tucson,
and anywhere else not in the mountains, the mercury soars above 100 regularly.
Suffice to say, our central air units get quite the workout. Inevitably, some end up dying on a 120-degree day – not exactly our idea of fun.
We won’t sugarcoat it – replacing your central air-con system can get stupidly expensive. If you don’t have $6,000 lying around, you’ve just plunged yourself deeply into debt. If you do, you’ve probably wiped out the majority of your savings. So much for that vacation!
Sudden shock expenses can destroy your household budget in an instant. It doesn’t have to be this way, though – with careful planning, you can protect yourself against these nasty surprises. Experts advocate saving up an emergency repair fund. However, more and more Arizonans are seeking out the protection that a home warranty can offer.
In today’s post, we’ll talk about how a home warranty can make budgeting for repairs an easier task.
You Never Know What’s Coming Around The Bend
At first glance, household expenses appear to be straightforward. Every month, you pay utilities – less in winter, more in summer. Generally speaking, though, those costs are fairly predictable, especially if you’ve locked in a rate.
As you settle into your routine, you can quantify other expenses. For example, if you track the cost of cleaning and maintenance supplies, you can slot them into your budget. However, there is one line item that many homeowners fail to account for – emergency repairs.
Appliances and systems are machines. Any machine, no matter how well-maintained, will eventually break down. And, when they do, the bill can completely undo all your “careful” planning.
Unlike preventative maintenance, you can’t ignore a broken pipe or A/C unit. Unless you like living without running water or 70-degree air, they need to be addressed. Whether you have thousands of dollars lying around is irrelevant.
Yet, when everything appears to be running smoothly, it can be hard to faithfully set aside a ton of cash. Heck – most of us have trouble making ends meet as it is. Every month, we juggle mortgage payments, car payments, and setting aside money for our kid’s college education. Tossing another ball into the mix isn’t easy.
Home Warranties Flatten Out Shock Expenses
Easy or not, it doesn’t change the stark
fact that, someday, your central air will fail. Someday, your fridge will die.
Someday, the wiring in your 60s bungalow will go on the fritz. When these
things happen, they will cost you a LOT, and you will have NO CHOICE but to fix
Where will your finances be when these chickens come home to roost? At best, they’ll take the lion’s share of your savings. At worst, they’ll force you to take on debt.
It doesn’t have to go down like this, though. While it’s prudent to have an emergency fund, a home warranty can also protect your finances. But how, you say? Allow us to explain.
Home warranties are service contracts that cover crucial gaps left by homeowner’s insurance. The latter policies, while comprehensive in scope, explicitly EXCLUDE claims caused by “wear & tear.” They do so by reasoning that these claims are, by definition, “predictable occurrences.”
In essence, your insurer is saying this: “Your air-con unit will fail someday. We don’t know exactly when, but somewhere on an infinite timeline, it will eventually break down. It is, therefore, a predictable occurrence.”
Of course, it doesn’t matter that the cost of replacing your unit could ruin your finances. To your home insurer, it’s just another HUGE liability off their books. Home warranty firms address this gap in the market. You pay them a monthly premium, and they promise to cover the repair/replacement costs of covered appliances/systems.
Whenever something breaks, you give your firm a call. Upon claim approval, you pay a small service fee, and then, they dispatch a technician to your home. Rather than pay THOUSANDS of dollars, you only pay something like $75 out-of-pocket.
The result? Home warranties replace sudden four-figure payouts with predictable monthly premiums and small service fees. If your home finances are tight, this arrangement can be nothing short of a game-changer.
Platinum Home Warranty – For Arizonans, By Arizonans
In theory, home warranties are a solid
product. In practice, the wrong firms can waste your precious time and money.
Consequently, it’s crucial that you pick the right home warranty provider.
It is easy to spot shady outfits – plagued by a consistent trail of bad reviews, they stick out like a sore thumb. Additionally, googling “[company name] scam” is a great way to find out whether a firm regularly abuses its customers.
Even companies with strong brands, like American Home Shield, can leave you wanting more. So, it is essential to vet every firm carefully.
Many firms you’ll come across operate in multiple states across the country. However, some focus on providing exceptional service in a specific state or region. In Arizona, Platinum Home Warranty stands out for the customer service they offer clients.
In particular, they respond quickly to claims and hire professional contractors that do great work. They also reimburse most claims promptly. Costs are reasonable, with budget plans starting at $44/month. Meanwhile, premium plans top out at $71/month, making it accessible to many Arizonans.
Their coverage is reasonably extensive. However, even premium plans feature coverage caps on many appliances and systems. Of note is their A/C coverage, as they have a $2,000 cap on claims. This allowance is enough to cover the cost of most repairs, but it only partially reimburses replacements.
As a result, be sure to set some money aside even if you end up going with Platinum Home Warranty (Arizona).
How Platinum Home Warranty Saves You Money
By now, you probably understand how a home
warranty can make shock expenses a thing of the past. But, can these policies
actually SAVE you money? They certainly can.
As of the mid-2010s, the average home in America was 37 years old. Unless you live in the suburbs, most resale homes come with significant annual repair expenses. According to The Motley Fool, Americans spend almost $5,000 per year on repairs and maintenance.
To be fair, a good portion of that is preventative maintenance, which is NOT covered by Platinum Home Warranty. So, let’s assume you spend $2,000 on repairs – not an unreasonable figure, given the poor condition of 1970s bungalows.
Platinum Home Warranty’s Platinum Plan has a monthly premium of $71/month. Over a year, that comes out to $852. Over an average year, you make three calls to Platinum. They charge a service fee of $75 per request, adding $225 to your annual bill. Coverage cap overages notwithstanding, you spend about $1,080 per year with Platinum Home Warranty.
Are you doing the math? In an average year, you’d spend half as much. In slow years, you’d pay about the same, but in expensive years, you’ll save BIG TIME!
Okay – so this is an oversimplification, as exclusions and coverage caps can affect the final number. But, given the average amount that Americans spend on repairs, the potential for savings is vast!
Protect Your Household Finances
Homeownership is a huge responsibility.
With huge responsibility comes huge financial obligations. When you organize
costs so you can easily account for them, they become easier to manage.
Home warranty firms have taken a wildly variable expense and tamed it. If you want to get your financial house in order in 2020, you should seriously consider getting one.