What Every Homeowner Needs to Know About Buying a Home Warranty
If you’re a homeowner, a home warranty could be an excellent complement to your traditional homeowners insurance policy. With added protection for repairs and replacements of any appliances and systems that break, a home warranty may help you save money.
It’s an especially big benefit for new homeowners. After spending all of your savings on a brand new home, it’s tough to face additional – and expensive – costs if you need to make repairs. And that’s where a home warranty can be a huge help.
Is a home warranty right for you? Homeowners who are trying decide need to consider the following.
You May Already Have Warranty Coverage
A home warranty offers protection for any of your home appliances. From your stove and oven to your water heater and washer, a home warranty covers both any repairs and replacements needed.
However, before you decide to get a home warranty, it’s important to check the coverage on these appliances. When you purchase new appliances, they often come with a warranty of their very own – a manufacturer’s warranty. And some also allow you to purchase an additional or extended warranty.
So, make sure to see if any items are already covered by a warranty of their own. These free warranties could save you money and eliminate the need for a home warranty.
Additionally, you’ll want to double-check your credit cards. Many appliances are actually covered under extended warranties that are offered by your credit cards – so if you purchased any of your home’s appliances yourself, your credit card may have them covered. Some, like American Express, offer as much as an extra 2 years of warranty coverage on top of a manufacturer’s warranty.
There Are Multiple Costs Associated with a Home Warranty
A home warranty isn’t free. Unlike other types of warranties, a home warranty does come with an annual cost.
However, a home warranty doesn’t have to be expensive. Home warranties are actually quite affordable. You’ll pay an annual fee that covers you for 12 months, with an option to renew your warranty each year. Prices vary depending on where you live and the type of home warranty you choose – it can cost approximately $480 to $600 a year in low-cost cities, or up to $1,000 in places like New York or Los Angeles.
On top of that annual cost, you may also have other low-cost charges to pay. Most home warranties charge between $50 and $100 per service visit. And when you make a claim, you can get the cost of any repairs – or a new appliance – covered by your warranty quickly and easily.
You Need to Check – and Understand – Your Coverage
When you decide that a home warranty is the best choice for you and your home, it’s important to make sure you thoroughly read your coverage. You need to know what’s covered – and what you could end up paying in the event of a problem.
Understanding the coverage offered by your home warranty is also important in deciding which warranty works for you. A home warranty can offer minimal, moderate, or complete coverage. And some warranty providers will even let you customize your plan.
Typically, a home warranty will cover specific appliances and systems. For example, your refrigerator will likely be covered – but your refrigerator’s ice maker may not be. Or your hot water heater may be covered, but the water tank might not be.
You should also check out the circumstances that are covered. For example, if your oven stops working in self-cleaning mode or gets fried during a power surge, it may not be covered. However, if it simply stops heating properly, it will likely be covered.
You’ll also want to check a home warranty’s coverage to see how broken items are replaced. Sometimes, if an appliance breaks, the warranty will completely replace it with an equal model. However, in some cases, the warranty company may only give you the value of what it thinks your appliance is worth.
Do Your Research Before Choosing a Home Warranty
Choosing a home warranty isn’t an easy process. Because there are so many variables in coverage and warranty plans, it’s incredibly important to do your research before settling on a single warranty.
And the best way to do your research is to search online. Search for home warranties that can cover your specific appliances or home systems. Look for customer reviews, and see which plans are within your price range. From there, you’ll be prepared to narrow down your options and pick the best available one.