Buying a Home Warranty: Is It Worth It?
Buying your first home can be a nerve wracking experience. There’s a lot involved, and you might even be worrying about how to tackle any repairs or issues that will arise with homeownership. When you buy a house, that in itself is a large expense, but your expenses aren’t over. What do you do when the water heater stops working?
These are problems that you will face even if you are selling your current home to buy another. You want to be able to protect not only your home, but your finances as well. Many homebuyers decide to buy a home warranty policy, which provides that protection. Depending on the warranty plan, everything from home electrical and plumbing systems to your air conditioner could be covered. While the upfront cost can be a little steep, ranging from $350 to $800 with a full coverage warranty, a home warranty plan can provide you with the peace of mind you are seeking.
Home Warranty vs. Home Insurance
You might be inclined to think that you don’t need a home warranty because you have an insurance policy. Home insurance, however, is not like a home warranty at all. Homeowner’s insurance only covers the actual building of the house and your personal possessions. If your house burns down, or you are robbed, then your insurance policy kicks in to cover you.
However, if your water heater breaks and stops working, your home insurance policy won’t cover the repair or replacement of the water heater. This is where a home warranty comes in. With a home warranty, if your water heater stops working, you call your warranty company and arrange a service call. You will pay a service fee, typically around $75, and a service provider will come out and fix or replace your water heater. All you pay is that service fee. Of course, what the home warranty covers depends entirely on the contract that you have, and the coverage that a warranty company offers. You will pay more to have more items covered.
Home Warranty Coverage
By now, a home warranty is probably starting to sound really good. While a home warranty is a solid invest for peace of mind and your wallet, there are some things that a home warranty doesn’t do. For instance, if your water heater simply stopped working because it was old, most home warranties won’t replace worn out appliances. A home warranty is designed to offer protection against unexpected repair bills, not to be a cheap way to replace a worn out appliance or home system.
Each warranty will vary, depending on the company offering the warranty, but the majority cover at least the same basics.
· Home warranties will cover kitchen appliances, like the range, oven, dishwasher, and built-in microwave.
· It will also cover the garbage disposal.
· Plumbing is covered, including a whirlpool tub.
· The sump pump is covered by a home warranty.
· It covers the water heater.
· Home warranties cover ceiling fans and exhaust fans.
· It also covers heating and electrical systems.
If you want coverage beyond those basics, you will need to purchase an enhanced or upgraded home warranty policy. With an enhanced policy, you’ll be able to cover your air conditioning, refrigerator, washer and dryer, and even an automatic garage door. If you have a swimming pool or a spa you want to include, that will be extra as well, but then you can also include your septic system if your home has one.
Is a Home Warranty Worth It?
As a buyer, you will need to decide if the extra cost of the home warranty is worth it to you. When buying an older home, it makes sense in order to protect yourself from the cost of repairing old plumbing pipes and electrical systems. Of course, sometimes the seller, or even your real estate agent, will purchase the home warranty for you, as a kind of bonus. In that case, it makes perfect sense to have a home warranty. It didn’t cost you anything, and if you want to renew at the end of the year, you can, or you can simply let it lapse.
A home warranty can be worth it when you are the seller. If you are a selling a home that has older appliances, or if the home itself is older, you can buy a home warranty. This way, you can handle any repairs that might come up while you are selling the house, or that the home inspection reveals. On the plus side, the warranty will simply transfer to the buyer when the sale is complete. This can help sweeten the deal, especially if the buyer is concerned about any costly repairs.