May 23, 2018 12:55 pm

Are Home Warranties Worth It?

If you’re a new homeowner of an old house with not a lot of spare cash — or if you’re an experienced homeowner who is sick and tired of repair costs — a home warranty might be the answer to your worries. Home warranties cover a wide range of common repair problems, from appliance breakdowns to plumbing leaks to water pump failures. But what your warranty pays for — and its annual costs — don’t always make good financial sense. Here is how to determine whether or not a home warranty is right for you, and how to know if the warranty you chose is the smartest bet for your wallet.

House Made of Tools

What Is a Home Warranty?

Think of a home warranty as an insurance policy for the appliances and systems in your home. Just like insurance, you can buy a “Cadillac” plan or a basic plan that only covers, well, the basics. Terms vary between providers, but in general, annual plans cost anywhere between $350 and $500 or more per year. You can get coverage for add-ons such as pool equipment, well pumps and other extra items. When a problem occurs with your appliance or system, the warranty company will send its own repairperson to assess the damage for a reasonable fee, usually less than $100. If the technician can’t repair the problem, the company will pay to replace it.

Sounds good, right? As always, the fine print matters. There are limits on repairs and replacements on high end appliances such as those from Viking, Sub Zero and other pro-style manufacturers. Some common issues, such as pest control and lawn or sprinkler systems, won’t be covered. Timing also matters — for example, if you purchase a warranty right after your oven breaks, you might need to wait 30 days or longer before requesting service, depending on your plan. Also, some appliances — such as your kitchen fridge — might not be included in your basic plan, so read the fine print before committing to a provider.

Do You Need a Home Warranty?

If your home, appliances and systems are newer and are still covered under an original manufacturer’s or extended warranty, purchasing a home warranty is likely a waste of money. Considering, however, that most warranties only last one year — and that some estimates suggest homeowners spend as much as $1,500 on home repairs every year — chances are a home warranty is a good choice for you.

If your home is older and you suspect a future of mounting repair bills, a home warranty can provide some peace of mind. You know your home best; is your plumbing usually a problem, or is your boiler nearly old enough for coal? Is your dishwasher or washing machine a distinctive harvest gold? If so, a warranty will not only protect you in the event a repair is necessary, you might also wind up with a brand new appliance if old parts aren’t available to fix it.

The last reason to get a warranty is if your home is on the market. Although a warranty won’t increase the value of your home, it might make it more attractive to a buyer sitting on the fence.

Read the Fine Print

Although most home warranties cover the same appliances and systems and cost roughly the same amount to purchase, reading the fine print is worth it. Some companies won’t accept appliance repair calls for the first 6 months of a policy. Others will cover problems right away. There are always limits on total liability per year, so check on those, too — especially if you anticipate using your warranty services frequently. Keep in mind homes larger than 5,000 square feet are considerably more costly to warranty than smaller residences. Finally, ask around — your local real estate agent probably has a recommendation ready to go.


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