If you have recently purchased a home, you have likely been offered a home warranty as well. Some realtors will give their clients home warranties for one year as a way of saying thank you for doing business with them.
Home warranties are designed to be a contract that covers repairs and replacements of systems and appliances in the home. Some home warranties have a limited duration, while others can be renewed on a yearly basis.
What Does a Home Warranty Include?
The answer is going to vary based on the contract that you’re presented with. In most cases, the standard home warranty plan is going to cover parts and components of the heating system, electrical system, air-conditioning system, plumbing system, and some of the home appliances.
Most home warranties come with the option to add on extras, such as a pump for the well, a swimming pool, a spa, etc.
Do I Need a Home Warranty If I Have Homeowner’s Insurance?
Both homeowners’ insurance and home warranties offer tremendous protection. However, the protection that they offer differs from one another. There are actually benefits to purchasing both.
Your home represents one of the largest investments that you will likely make. Protecting that investment is not just the smart thing to do, but it’s the essential thing to do. The best way to do this is to have homeowner’s insurance and a home warranty.
Homeowner’s insurance will cover damage that happens to your home if there is a storm, if someone breaks in, if there is a fire, or if there is a natural disaster. Homeowner’s insurance is going to protect the interior of your home and your personal property if it gets stolen and offers general liability if someone is injured while they are on your property.
Homeowner’s insurance is a must as it’s required by banks if you’re going to get a loan. With homeowner’s insurance, you always have some form of deductible.
A home warranty, on the other hand, is a service contract. It allows for the replacement of system components and appliances when they fail because they got old or as a result of wear and tear.
For example, you run your air-conditioning system throughout the entire summer, and by mid-August, it’s not working. There was no storm, there was no theft, and there was no vandalism. The product simply ran its life course. Homeowner’s insurance is not going to cover you here, but a home warranty will pay for the repair or replacement of the damaged appliance.
When individuals purchase home warranties in California, they do so by understanding that their appliances and other features of the home can break at a moment’s notice. This is especially true if you’re purchasing an older home that comes with appliances that have been used for some time.
When things break, they often break at the worst possible time. They break when you don’t have the money to invest in their repair. A home warranty is a form of protection that gives you the peace of mind of knowing that if an appliance breaks, it will be repaired by a trained technician.
Are Home Warranties Worth the Cost?
Is it worth the cost of purchasing a home warranty? Depending on the complexity of the plan that you’re purchasing, you could be spending $600 a year or more. However, a home warranty can help you save a ton of money on an expensive home repair.
The biggest question you hear people ask is what if I don’t need any repairs during the life of my warranty? While that’s possible, it’s highly unlikely. Just think of all the systems in your home. If you need a simple plumbing repair, you’re going to be paying between $175 and $500. If you purchased a basic home warranty that costs you around $350, just one repair made that warranty worthwhile.
Since appliance malfunctions are unpredictable, purchasing a warranty gives you a sense of peace of mind. You know that every single month you are going to be paying X amount of dollars to cover the warranty on a particular date of the month. This is something you can budget and plan for.
When the unexpected appliance malfunction happens, your plan stays the same. Conversely, if you don’t purchase a home warranty, it is true that you are not going to have the expense every month. However, when that one inopportune appliance disaster happens, you are setting yourself up for financial frustration for months to come.
Read the Contract Carefully
There’s no question that purchasing a home warranty can be a protection. Home warranties are not designed to cover everything. You need to take the time to read the contract in order to know what is covered and what will not be covered. It can be frustrating to think that an appliance is covered under warranty and then realize that it is not.
You cannot control when an appliance is going to break or when your plumbing is going to stop working. What you can do is plan ahead for the unforeseeable. By purchasing a home warranty along with mandatory homeowner’s insurance, you know that the investment you made in your home is safe.
