Should You Buy a Home Warranty?

Should You Purchase A Home Warranty

The question most home owners ask themselves is should you buy a home warranty?  If you’ve bought a home recently, you might have purchased or received a home warranty. However, consumers frequently expect more from these plans than they deliver.

Home warranties aren’t insurance policies. Instead, they are service contracts. Like a service contract that covers repairs to your computer, a home warranty is a company’s agreement to pay for fixing — and, if necessary, replacing — specified home components.

By comparison, a home insurance policy covers losses if your home and its contents are damaged or lost to theft, fire or other causes.

A basic home warranty costs about $350 to $500 a year or more. A warranty typically covers kitchen appliances, plumbing, water heater, heating and electrical system components, sump pump, whirlpool tub, and ceiling and exhaust fans.

“Enhanced” plans, purchased for another $100 to $300, provide added coverage for such things as a washer and dryer, air conditioning system, refrigerator and garage door opener. Optional coverage can be added, including for pools and septic systems.

 

Should You Buy a Home Warranty?

When buying a newly constructed home, you probably don’t need a home warranty. Many states require the builder to repair defects in materials and workmanship for a few years – typically two to 10 years. And the new appliances in those new homes are almost always protected by one-year warranties.

 Existing houses, however, may have considerable wear and tear, and tend to be equipped with older appliances. If the house is filled with over-the-hill systems that may require repair instead of replacement, a home warranty may make sense. Homeowners who think they’ll be able to upgrade appliances to newer and better models with coverage from a home warranty are usually disappointed to learn that’s outside their policy’s reach.