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.