Can a Home Warranty Save You Money?
When considering whether to invest in a home warranty, you need to do your homework. Not all policies or providers are created equal, and you need to consider your motivation for taking out this insurance.
The question is, will a home warranty save you money? Unfortunately, the answer is a solid maybe. It depends on the policy and why you are buying it.
For example, it could be a great thing to have in place if you are buying a home. It assures you that you are armed with protection if appliances or other major home systems suddenly fail. If the house has several older systems, which could require repair instead of replacement, a home warranty makes buying this home less risky.
Also, it could be a particularly wise investment if you are selling your home because it is an added bonus that can help a buyer feel comfortable purchasing the property, providing the policy is transferable to the new homeowner. It can put their mind at ease that they won’t have a huge risk of unbudgeted repair costs soon after they move in since they would be protected until the policy expires.
Things you should know about warranties
Home warranties typically cost between $300 and $700 a year with a service call fee that can be between $60 to $100, depending on the policy. But, keep in mind that it may not cover everything you might expect:
- A policy covers only the appliances and systems it specifically states it covers. Typical items may include plumbing and electrical systems, heating and duct work, water heater, refrigerator, dishwasher, range or oven, built-in microwave, trash compactor and garbage disposal.
- The policy may not replace an old appliance with an upgraded new model. It depends on the coverage you buy.
- Policies may have a deductible, and the entire cost of an expensive repair may not be covered. Most policies have an annual limit – $1,500 to $2,500 per year, for example.
- Appliances may not be covered if they have already been repaired before or if they were not installed correctly.
If you are buying new construction, you probably don’t need a home warranty. The builder usually is required to repair defects in materials and workmanship for a few years – sometimes up to 10 years – and your new appliances are typically protected by one-year warranties.
When it comes to home warranties, it pays to do your homework, research companies online, and read consumer reviews. Then, when it’s time to choose a policy, read the fine print and ask any questions upfront before you sign anything.
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