When you get into the process of buying a house, you may also receive an offer to purchase a home warranty. A home warranty is something that can help you save money on any future repairs for your home. However, home warranty policies can have a hefty price tag, leaving many to wonder whether home warranties are worth it. Basic home warranty plans cost between $300 and $600 per year.

Sometimes, home warranties can save a substantial amount of money on home repairs. However, they are only worth buying if they are put to use. For example, if your policy does not cover claims for a specific repair or if you do not need to make any repairs during your warranty period, the money you spent on the policy could be perceived as waste. Hence, here is everything you need to know to decide whether a home warranty is worth the cost and effort.

What is a home warranty?

A home warranty is described as a home service contract that provides coverage for repairs or replacements of different appliances and systems in your house. For example, if you are having trouble with plumbing or if an appliance has broken or malfunctioned, the home warranty provider will enlist one of its contractors to evaluate and resolve the issue.

What does a home warranty cover?

One of the important things to consider when deciding whether home warranties are worth it is what they cover. The general aspects of a home that these policies cover are the HVAC, electrical, home appliances, and plumbing systems. The home appliances that are commonly covered in a home warranty plan include the garbage disposal system, oven, washer, dryer, and stove. You can also opt for additional coverage that protects other parts of your house, like swimming pools or fences.

Advantages and disadvantages of home warranties

• Advantages
  The primary advantage of a home warranty is the convenience of repairs and replacement, especially if you have an old house. Even when you move into a new house, you may not have an established relationship with an HVAC technician, appliance repair specialist, or plumber. Hence, searching for great workers that offer you great service at a reasonable price will be extremely difficult. On the other hand, while under the home warranty period, you have to simply make a call to the warranty provider and they will dispatch a contractor that has experience with the type of repair that you require.

The second advantage is that you could potentially save a large sum of money. If your house requires extensive repairs that cost more than what a home warranty would cover, buying a home warranty can be a financially smart decision. For example, the estimated average cost of a plumber is between $175 and $450 for a simple repair job on pipes. In such a case, paying $300 for a decent home warranty plan saves you about $150.

• Disadvantages
  The sole disadvantage that may leave you asking whether home warranty worth the cost is the cost itself. You will be liable to pay for the home warranty even on the years that you do not require any repairs. In case you need a small repair, it is better to pay out of your pocket rather than paying much more for a home warranty. It is nearly impossible to foresee what repairs or replacements you will be needing. Hence, it may not be advised to waste a large sum on something you may not necessarily need.

Exclusions and limitations of home warranties

A simple fact you need to know when figuring out whether a home warranty is worth it is that home warranties do not provide coverage for everything. So, you need to know exactly what your plan offers by reading through the policy thoroughly.

Homeowners feel frustrated when they realize that the specific repair they require is not covered in the policy. For example, the outer hardware of your shower faucet may be covered by your home warranty, but the internal parts may not. Similarly, your sewage pipes might have coverage but only under the condition that they are not damaged by tree roots.

Additionally, coverage by home warranties is only applied for damages through regular wear and tear. If any system in your house has suffered damages intentionally or through a natural disaster, the policy may not provide coverage. For example, if the air conditioning system in your home requires repairs, the contractor that the warranty provider sends first ensures that the system was maintained well. If he/she determines that you have not done regular maintenance on the air conditioning system and neglected it, your claim may be denied.

Can home warranties save you money?

The question of “are home warranties worth it?” depends on whether they can save you money. That question, in turn, depends on what happens in your home. More precisely, it depends on the type and number of repairs required for your house. It also depends on the amount of money you’re spending on the warranty as opposed to how much you would have to pay for the repairs if you didn’t have it. Certain home warranty companies charge a service fee costing between $30 and $75 for each visit. Hence, it is better to check the service fee in the contract before procurement. Some of the major providers of home warranty plans include American Home Shield, InHome Warranty, and The Home Service Club.

Possessing a home warranty gives you a sense of security with your home purchase. This is especially true if you are buying an old house with older HVAC units and appliances. For some homeowners, this is enough reason to invest in a home warranty. So, if you wish to buy a home warranty plan, it is better to do it when you buy the house because service providers like The Home Service Club, American Home Shield, and InHome Warranty offer a better price at that time.