A home warranty is a way to mitigate your financial risk through purchasing coverage for your home’s appliances in case a breakdown were to occur. This review discusses whether or not a home warranty is actually worth the cost and headache often involved with the claims process.
What is a home warranty?
A home warranty covers your home’s appliances if and when a breakdown occurs. Keep in mind, a home warranty is not an insurance policy, although it works in a similar manner. With a home warranty, you pay a certain amount of money to receive the coverage. Then you can file a claim if a covered breakdown occurs, and the home warranty provider can assess the claim and pay for the repair and replacement costs. Most home warranties last for one year before renewal is needed.
What are the benefits of a home warranty?
If you do not have enough money set aside to fix or replace your home’s appliances after they break down, then a home warranty can be a good way to mitigate your personal financial risk. For example, if your refrigerator breaks down unexpectedly, then it could cost more than $1,000 to fix (HVAC units can be even more costly). In this case, you can simply file a claim and not have to worry about any of the repair or replacement costs.
What are the potential drawbacks of a home warranty?
There can be catches with many home warranty policies. For example, you may think the price is good, but actually filing a claim and receiving the coverage that you thought was promised to you in the contract might be trickier than you imagined. Perhaps most notably, there can be additional fees with a home warranty. For example, a home warranty provider may still charge you $100s in service calls after a claim is made.
How to determine if a home warranty is right for you
The most important thing to do when considering a home warranty policy is to carefully examine the terms of the proposed contract. You want to know every potential “catch” before you sign on the dotted line. Also, check the reputation of each provider you consider, and you should probably cross off providers that have a history of less than stellar reviews. Once you find a provider you can trust, then you should do a cost analysis of how much they are willing to cover in repair and replacement cost vs. how much the warranty costs to determine if you should purchase a warranty.
The bottom line: is a home warranty worth it?
A home warranty can be a great way to reduce your risk and provide peace of mind knowing that you will not have to cover any repair and replacement costs related to your HVAC, refrigerator, and other covered appliances. This can be particularly useful for homes with older appliances. Assuming you can choose a provider that does not have tons of hidden fees or a difficult claims process, then a home warranty can be a good idea. However, understanding your contract is of the utmost importance before you purchase.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129