Home Warranty Benefits
Home warranties cover the breakdown of major home systems and appliances due to normal wear and tear. Homeowners should remember that warranties are not the same as homeowners insurance, which protects your home’s structure and belongings against costs associated with damage caused by fire, theft, or weather damage. Keep reading the guide below to learn more about the benefits of home warranties, how they can help save you money, and what they cover exactly.
How Does a Home Warranty Work?
Once you purchase a home warranty, you’ll start paying an annual or monthly premium. When your coverage officially begins, which is usually within 30 days, you can contact your home warranty provider to file a claim regarding a covered appliance.
Your provider will connect you with a licensed technician to diagnose your problem. Many warranties require you to pay a service fee or deductible to the technician at the time of service. Once the technician diagnoses the problem, they’ll either repair or replace the covered system or home appliance.
Carefully review your plan’s exclusions, such as those for preexisting conditions, cosmetic issues, or damage caused by neglect or misuse. Knowing your warranty’s limitations will make it easier to file a claim with your home warranty company.
What Does a Home Warranty Cover?
Home warranties typically cover the items below.
- Electrical systems: Major electrical components, such as wiring, circuit breakers, and electrical panels
- HVAC systems: Heating and air conditioning units, compressors, furnaces, and ductwork
- Major appliances: Kitchen appliances such as refrigerators, ovens, cooktops, dishwashers, and built-in exhaust hoods, as well as washers, dryers, and water heaters
- Plumbing system: Pipes, drains, toilets, garbage disposals, and main shut-off valves
Coverage will vary depending on your home warranty provider. Some plans may offer add-on coverage options for swimming pools, spas, septic systems, or well pumps. Carefully review the details of your plan to make sure it covers everything you need.
What Doesn’t a Home Warranty Cover?
Home warranties offer valuable protection, but they come with limits. Exclusions of your plan may include the following:
- Cosmetic defects: Home warranties typically focus on functional issues, not cosmetic blemishes such as scratches or dents.
- Improper maintenance: Neglecting regular maintenance on covered items can void your coverage for breakdowns caused by lack of upkeep.
- Preexisting conditions: Your warranty probably won’t cover items if they had issues before your coverage began.
Be prepared to pay for out-of-pocket expenses associated with a home warranty claim. Your warranty may not cover permit fees, the cost to haul away old appliances, service call fees, or any modifications needed to meet building codes, for example.
Understanding the exclusions of your home warranty plan can help you to avoid surprises down the road. If you are unsure whether your warranty covers a particular item, ask a representative before you file a claim.
Benefits of a Home Warranty
A home warranty can help you maintain your new home’s various appliances and systems. Below are some key benefits of a home warranty.
Cost Savings on Repairs and Replacements
One of the most significant advantages of a home warranty is potential cost savings on repairs and replacements. Appliance breakdowns are inevitable because these systems don’t last forever.
Here’s what you can expect to pay for common repairs and replacements:
- HVAC system
- Average replacement cost: $7,500*
- Average repair cost: $350
- Water heater
- Average replacement cost: $1,320
- Average repair cost: $600
- Refrigerator
- Average replacement cost: Between $1,000 and $2,000
- Average repair cost: $650
*Cost data in this article sourced from Angi.
A home warranty helps you budget for these expenses. Instead of facing a hefty bill for a broken appliance, you’ll pay a monthly premium and give the technician a service fee at the time of service. It’s a much more predictable cost that makes it easier to plan your budget.
Peace of Mind
A home warranty is a safety net for your home’s appliances and systems and gives you peace of mind. If a critical component breaks, you don’t have to scramble to find a qualified repair person or derail your budget with a big bill.
Home warranties are especially beneficial for the groups below.
- First-time homebuyers: New homeowners are frequently unprepared for the potential cost of repairs and may not have an established emergency fund. A home warranty can help protect them financially.
- People on a fixed income: Unexpected repair costs can quickly disrupt a budget. A home warranty can help to manage expenses.
- People who don’t have many DIY skills: Not everyone is comfortable performing household repairs. A home warranty eliminates the need to do the work yourself or find and vet a qualified repair person.
Home warranties guarantee that a professional handles your home repairs. Knowing your home is in good hands if something goes wrong can bring peace of mind.
Convenience and Reliable Service
A home warranty will give you access to a network of pre-screened service professionals. You can contact your home warranty provider to file a claim whenever a covered item malfunctions, and a representative will find a qualified technician to manage the repair or replacement for you. This technician will have experience handling the repairs you need.
Home warranties streamline the repair process. You get prompt, professional service for your home appliance or system issues.
Pros and Cons of Home Warranties
Home warranties offer many compelling benefits, but they aren’t a perfect solution. Before investing in a plan, consider the pros and cons of their coverage.
Pros
- Convenient and reliable service from pre-screened technicians
- Cost savings on repairs and replacements, which significantly reduce the financial burden of unexpected breakdowns
- Peace of mind knowing you are covered for repairs on major appliances and home systems
- Predictable costs for home repairs make it easier to budget your maintenance needs
- Protection for older appliances
Cons
- Coverage limitations such as preexisting conditions, cosmetic issues, and certain types of breakdowns
- It may not be cost-effective if your appliances are new and well-maintained
- Limited choice of repair companies, as the warranty provider will select the technician who visits your home
- Potential claim denials due to exclusions and limitations
- Service call fees for every claim, which could add up over time for minor repairs
Home Warranty vs. Homeowners Insurance
Homeowners often confuse home warranties and homeowners insurance. Both offer financial protection for your home in very different ways.
Homeowners Insurance
Homeowners insurance protects your home’s structure and your belongings from costs associated with damage incurred by fire, theft, vandalism, and natural disasters. It may also cover certain liability claims, such as someone getting injured on your property. Homeowners insurance can help you rebuild your home, replace damaged belongings, or cover legal costs. Most mortgage lenders require homeowners to carry homeowners insurance.
Home Warranty
A home warranty is a service contract that covers the breakdown of your home’s systems or major appliances due to normal wear and tear. It covers items such as your HVAC system, plumbing, water heater, and major kitchen appliances. If a covered appliance malfunctions, a home warranty company will arrange a repair or a replacement. Home warranties are optional and not required by lenders.
How To Choose a Home Warranty
There are many home warranty companies and coverage options available. Selecting the right home warranty for your home requires research.
Below are some tips to help you choose a home warranty:
- Read the fine print, and don’t get caught by hidden exclusions. Carefully review each home warranty’s policy details to understand what’s covered and what isn’t. Pay close attention to repair limitations, exclusions for preexisting conditions, and coverage limits.
- Reputation matters. Research different home warranty companies and choose one with a good reputation. Look for positive customer reviews, strong ratings from independent sources, and a history of efficient claims processing. Check the Better Business Bureau and online review sites for the best home warranty companies.
- Tailor coverage to your specific needs. When choosing a plan, consider the age and general condition of your appliances and home systems. A basic plan might offer enough coverage if your appliances are newer, for example, but you might want a more comprehensive warranty contract if you have older appliances.
- Pay attention to the service call fee, which you’ll pay per claim to the technician who visits your home. Factor this cost into your decision-making process.
- Study the claims process with your home warranty provider. You’ll typically need to contact the provider, provide details about the issue, and schedule a technician visit whenever an issue arises. Knowing the steps required before you have an issue will lead to a smoother experience when you need to use your warranty coverage.
Our Conclusion
A home warranty offers homeowners protection and peace of mind, safeguarding them against expensive repairs and replacements of major appliances and home systems. It can be a useful tool for budgeting home maintenance needs and avoiding stressful situations. It also gives you access to a network of pre-screened repair professionals.
However, home warranties also have potential drawbacks. Carefully review the details of your coverage, understand its limitations, and choose a company with a good reputation. A home warranty can often be a good investment for homeowners.
FAQ About Home Warranty Benefits
What is the biggest benefit of a home warranty?
The biggest benefit of a home warranty is the financial protection it offers. It protects homeowners against the high cost of repairing or replacing their major home systems and appliances.
What are the cons of a home warranty?
The cons of a home warranty are that they don’t typically cover preexisting conditions or cosmetic issues, and you’ll need to pay a fee to a service provider with every claim. You may not have a choice about who repairs your appliances or home systems, either.
What is typically included in a home warranty?
A home warranty typically covers heating and cooling systems, plumbing, water heaters, major kitchen appliances, washers, and dryers. Some plans may include add-ons such as pools, septic systems, or well pumps.
Do home warranties save you money?
Home warranties can save you money on repairs, especially for major breakdowns. However, they might not save you money if your appliances are new and well-maintained.
How much does a home warranty cost?
A home warranty costs between $360 and $540 per year, depending on the plan, coverage options, and home location.
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