If you're a homeowner, chances are you've heard about home warranties. They work a little like home insurance but the two aren't quite the same. Home insurance covers damage to your home caused by natural disasters while the warranty covers repairs to appliances.
What is a home warranty?
A home warranty is a service contract between the homeowner and the company, where the company agrees to cover the cost of repairing certain appliances and systems in your home.
Home warranties typically provide coverage for one year, at which time homeowners can renew their contracts for another year. In many countries, contractors are required by law to provide a warranty on the structural elements of the home.
How much does a home warranty cost?
Some plans cover only appliances. Others may include parts that wear out and need repair or replacement, such as electrical wiring, heating, and cooling systems, roofs, and basement water leaks. The average monthly cost of a home warranty plan is between $25 to $50 for basic coverage. However, some home warranty companies provide enhanced plans for an extra $8-$25.
What does a basic home warranty plan cover?
Most home warranties cover only the mechanical items in your home—not windows or doors, for example. Home warranties don't cover repairs caused by negligence, improper maintenance, or poor installation.
Many home warranty plans include coverage for the following:
Some companies offer additional coverage of the following for an extra cost:
The following items are not covered under the warranty plan
Here are some reasons why you should consider buying a home warranty:
1. A great way to save some money to pay for a repair bill
When buying a home, you want to make the best investment possible. And while you may have gotten a good deal on your home, maintaining it comes with a hefty price tag. When your appliances break down and need repair or replacement, you'll be happy you purchased an extended warranty for them. The peace of mind you get knowing that you're covered if something goes wrong will help you sleep at night. Not to mention it'll save you a lot of money in the long run.
2. Save time and energy
Even if you have the money to get things fixed around the house, it can be a hassle to figure out what is actually broken and to find a repairman who knows what they're doing and has the right tools for the job. This means shopping around for a reputable repairman and comparing prices before making your decision.
A home warranty company handles the burden of home repairs so you don't have to. The warranty company will coordinate all of the repairs with licensed contractors and technicians so that repairs are done in a timely manner.
3. Enhance your home insurance coverage
While a home warranty cannot substitute a home insurance policy, it does offer additional coverage in the event that a sudden malfunction of your home appliances and systems occurs. This is because a home warranty covers these appliances and systems from damage due to normal wear and tear, unlike a regular home insurance policy which does not cover those items.
Home warranties offer people who already have a home insurance plan a great way to ensure that their home's essential systems are protected.
Most companies require a 15-30 day waiting period before they will cover you, while others have no waiting period at all. In addition, you don't need to have your home inspected before purchasing home warranty services. This means that you can sign up for warranties quickly, and start receiving coverage right away.
5. Anticipate future expenses
Home warranties give you a rough idea of future expenses and make it easy to budget for household expenses. For example, some plans are payable in monthly installments if an annual payment plan does not work for you. In this case, you know exactly how much you are supposed to pay every month. On the other hand, if something breaks down and you do not have a home warranty, you do not know what to expect when the repairer sends a quotation.
A home warranty is an excellent way to protect yourself from the additional expenses that come with owning a home. To get value for your money, do lots of research before signing a contract. After purchasing a home warranty, take care of your appliances and systems—then you'll never have to worry about a costly claim being denied.