There are dozens of reasons people prefer living in their home to an apartment – but every homeowner will probably tell you that there’s one major drawback: When something breaks down, you can’t call the management and ask them to fix it.
HVAC units go on the fritz on the hottest day of summer, water heaters stop working in the middle of winter, and – if you’re like most people – your kitchen appliances will break down just before a major holiday or dinner party. As the homeowner, it’s all on you to get those repairs handled.
Rather than relying on their savings, however, people are increasingly investing in home warranties to help them manage common household repairs. Learning more about what a home warranty is, and when it is right for you can help you get the protection you need for an uncertain future.
What Is a Home Warranty, and What Does It Cover?
A home warranty is an optional type of insurance protection that you can buy for your home. It functions as a service agreement between the company that underwrites the warranty and the homeowner to handle repairs and replacements for any covered household appliances or systems.
Home warranties vary greatly in their scope, but they will often cover things like:
- Your HVAC system
- Water heaters
- Plumbing issues
- Electrical problems
- Washers and dryers
- Refrigerators and stoves
- Septic systems
- Hot tubs and swimming pools
When purchasing a home warranty, it’s important to make sure that you fully understand what’s covered (and what is not). You also need to understand the maximum you can be charged for a service call (especially if it takes repeat trips) and any annual coverage limits.
Why Do You Need a Home Warranty if You Have Homeowners Insurance?
Home warranties can feel like an unnecessary expense – or maybe just another way for insurance companies to eke a few more dollars out of your wallet – when you already have homeowners insurance – but that’s generally only because people don’t understand the difference between the two.
Homeowners insurance covers things like damage to your chimney from an electrical storm, or missing shingles from your roof after a tornado. They also cover major damage that comes from things like burglaries and house fires, or pipes that freeze and break while you’re on vacation. In addition, they’re a buffer in case you get sued over a property liability claim after someone slips and falls on your porch steps or your dog nips the postal carrier.
Homeowners insurance does not, however, cover things that break down simply through the usual wear-and-tear over time. For example, your plumbing is an integral part of your home’s features and key to its usability, but a problem with your sewer line is not likely to be covered under your homeowners insurance. You can also bet that your appliances, including the washer, dryer, HVAC system and water heater, also won’t be covered if they break down and need to be replaced.
How Do You Tell if a Home Warranty Is Right for Your Situation?
Generally speaking, experts tell people that buying an extended warranty on a lot of purchases isn’t usually worth the money because the items they’re buying are either:
- Unlikely to break down on their own as long as you maintain them properly
- Not that costly in the first place, with a limited lifespan (which the warranty won’t extend)
- Not that expensive to repair if they do happen to break down
For the large part, that information might be true – if you’re talking about the average notepad computer, a gaming system or a piece of furniture.
Not so, however, when you’re talking about a whole house and its major operating systems. Home warranties are different from extended warranties because they’re usually designed to cover both your appliances and the whole-house systems, like the electric and plumbing. These are things that are expected to occasionally fail.
Typically, this means that you can call up your home warranty provider and get a reliable, trusted service professional from their network at your door in no time. If some appliance or system that’s covered by your policy needs to be repaired or replaced, you will usually only pay a service fee for the visit – and that can save you thousands.
This is particularly true if you’ve invested in a home with a lot of “smart” features, including smart appliances and built-in systems that control your home’s security, lighting, sprinklers and more. When something goes wrong, it’s definitely nice to know that the repairs are covered!
When Can You Buy a Home Warranty?
Home warranties sometimes are purchased when someone buys or builds a home (although builder warranties may sometimes offer sufficient overlap that an additional home warranty might not be immediately needed).
They’re also sometimes purchased by someone who is selling a home, as an incentive for buyers who may love those stainless steel kitchen appliances but dread the idea of having to replace them if they break. It’s estimated that the average home warranty runs somewhere between $300 and $1,000 per year, depending on its features, and a warranty that will cover a buyer for a year or two can provide great reassurance.
In reality, however, it’s never too late to get a home warranty – until something has already broken down and you’re facing that hefty repair bill.
Homeownership is one of the most rewarding experiences many people ever have, but it can be difficult to manage when repairs are needed. Aside from the unexpected expense, you also have to find a service professional that you can trust. A good home warranty can be an absolute lifesaver when something happens.
Shawna O’Brien, Executive Club
F.C. Tucker Geist Fishers