Buying a house is expensive – and not just because houses cost several thousands of dollars. Even if the property itself were free, the process of inspecting, appraising and closing comes with substantial costs. Plus, you have homeowners insurance to pay, movers to hire and contractors to work with to ensure your new home is just the way you want it. Why would you want to add another cost on top of all that?
The answer, of course, is for financial security. Home warranties protect your investment by covering systems in your house that homeowners insurance doesn’t touch. Still, many new homeowners are seriously tempted by the option of avoiding another monthly cost. Here’s why home warranties are absolutely worth it, and why you should get one for your new property as soon as possible.
What, Really, Is a Home Warranty?
A home warranty is a service agreement in which you agree to make a monthly payment and the warranty provider agrees to pay for the repair or replacement of crucial systems in your home. To different people, warranties mean different things; a home warranty for realtors is a guarantee that a house is high quality whereas a home warranty for long-time homeowners is financial help in repairing or replacing old appliances and systems around their home.
Though many people liken home warranties to homeowners’ insurance, it is important to know the differences to better understand the purpose of the two products. Both a warranty and insurance work to protect your investment by promising to pay for repairs to elements of your home. However, for insurance to provide coverage, damage must be unanticipated and tied to specific causes and effects. Conversely, home warranties will pay to fix damages from normal wear and tear to the systems covered in the policy. Home warranties and homeowners’ insurance rarely cover the same elements of your home, so by having insurance, you do not negate the need for a warranty and vice versa.
What, Really, Does a Home Warranty Cover?
Unfortunately, the bad answer is the most accurate answer: Different home warranties offer different coverage. To understand what a home warranty in your area might cover, you should contact a few warranty providers in your area and compare analogous plans and prices. Often, you can find home warranties that cover:
- Kitchen appliances. Your refrigerator and freezer, dishwasher, range and oven, built-in microwave, garbage disposal and other large, fixed appliances are almost always covered by a warranty policy.
- Other appliances. Your water heater, garage door opener, washer and dryer and other extraneous appliances are also typically covered.
- Plumbing. Contrary to popular belief, insurance rarely covers plumbing. A home warranty will assist in many plumbing-related repairs inside the home, which can be costly.
- HVAC. Your air conditioner and heater as well as all ductwork and fans associated with them are covered by most warranty policies.
- Roof. Roof leaks due to age as opposed to unforeseen, catastrophic damage are not the purview of insurance. Not all warranty plans cover your roof, but you can find a policy if you prefer having your roof thoroughly covered by some service plan.
If you acquire a warranty and need service on any systems covered by your policy, you simply contact your warranty provider with the issue. Then, the provider sends a qualified contractor to assess the damage and repair or replace the system as necessary.
It is important to remember that your warranty will only cover damage that occurs through wear and tear. Thus, if your home and appliances are all brand-new, it might not be prudent to pay for a home warranty – especially because many of your systems might still be under different warranties. However, if you have any concerns regarding the long-term functioning of various systems around your home, it might be safer to acquire a warranty now than to pay exorbitant and unexpected costs later.
Are There Any Disadvantages of Having a Home Warranty?
There is only one obvious disadvantage to having a home warranty: the cost. Most warranties cost between $300 and $500 per year, typically broken into monthly installments. However, the comparison isn’t as simple as “keep $500 per year” versus “spend $500 per year;” rather, you must consider that you could spend that money and more trying to repair and replace systems that break down.
As with your home insurance, you might be able to include warranty payments in your monthly mortgage, making the process of protecting your home slightly more convenient. Your home is a serious investment, and it really is worth your money to protect it any way you can.