Whether you are purchasing a new home or are already an established homeowner, figuring out if a home warranty is worth it can be challenging.
But it doesnāt have to be, what if I told you that home warranties arenāt that complicated.
And that once you understand how they work you will know exactly if you need one or not.
In this post today, I will answer the question are home warranties worth it, when you will need one, and how to get a home warranty plan.
What Is A Home Warranty?
One of the first things I like to clear up is what a home warranty is and what a home warranty isn't.
First and foremost, home warranties are not insurance policies, and they have an entirely different function than a home insurance policy.
We have an entire post about home warranties vs. home insurance, so I won't go into too much detail.
But the primary difference is that a home warranty will cover your items if they break from normal wear and tear.
While a home insurance policy will cover your items if they are destroyed by fire, burglary, or other covered losses.
A home warranty is a service contract between the homeowner and a home warranty company that will provide repair and replacement services for your major home components.
THE SIMPLY INSURANCE WAY
Home Warranties made easy.
Agents not required.
Get quotes and sign up online without talking to an agent. But, we are here if you need us.
Unbiased, expert advice.
Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.
Coverage in minutes.
You can get a home warranty within minutes of getting your quotes and applying online.
What Will A Home Warranty Cover?
The best way to determine what a home warranty will cover is to read through your plan and ask questions before you purchase anything.
On average they will cover things like your:
Most plans have a basic list of things it will cover, and you can add additional coverage for more specific items.
When your covered item breaks down, you will want to call the home warranty company.
They will then send out one of their contracted service providers to check out the problem.
Once it is determined that the item is covered by the warranty and needs repair or replacement, the service provider completes the work.
You will only pay a small service fee to have the item fixed or replaced.
INSURANCE WHERE YOU LIVE
Home warranties by state.
What Will A Home Warranty NOT Cover?
It is essential that you read over your home warranty plan to understand what is and isnāt covered.
In general, these policies will not cover anything that was damaged or destroyed by things like:
You would need to reach out to the appropriate company to cover those types of loss.
This is going to be between a homeowners insurance company, an earthquake insurance company and a Flood insurance company.
Who Has The Best Home Warranty Plan?
We have found the best landlord insurance to come from First American Home Warranty, you can check out or quick review below.
About First American Home Warranty
First American was founded in 1889 when Orange County California was first introduced.
In 2018, First American paid over $180 Million in claims for its customers.
First American Home Warranty has been the leader in the home warranty space for over 35 years.
They started as a small local company and now they are a national brand.
Product Features
Optional Benefits
There are option benefits available with this plan such as:
- Central Air Conditioning (electric)
- Additional Refrigeration
- Pool/Spa Equipment
- Well Pump
- First Class Upgrade
Simply Insurance Thinks
With multiple plan options and no limitations on how many times you can file a claim; First American is one of the best options for home warranty plans.
They also have additional options that allow you to have an even stronger plan if you need it.
Want to learn more? Check out our full First American Home Warranty Review.
THE SIMPLY INSURANCE WAY
Home Warranties made easy.
Agents not required.
Get quotes and sign up online without talking to an agent. But, we are here if you need us.
Unbiased, expert advice.
Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.
Coverage in minutes.
You can get a home warranty within minutes of getting your quotes and applying online.
Pros & Cons Of A Home Warranty
This post wouldnāt be fair if we didnāt discuss both the pros and cons of owning a home warranty.
Pros
Home warranties are excellent for people who donāt have an emergency fund.
It's also for people who would be at a total loss if something happened to their appliances.
They are also great for people who donāt want to worry about looking for a contractor or handyman when they have an issue.
Home warranties are also a great idea for people trying to sell their home.
If you include one, it can give a buyer more incentive to purchase with you.
Also, if you run through your savings, a home warranty can come in handy.
Primarily because it will make sure you are still covered if a covered item breaks down in your home.
Cons
The most significant issue I can think of in regards to a home warranty is the claims process.
As I stated above, home warranty companies will not pay out for items that are not adequately maintained.
Unfortunately, this is a very touchy area because it comes down to the company contracted service provider to determine if your item wasnāt adequately maintained.
This is why you will usually see negative reviews about a home warranty company when they donāt cover something.
My advice is to keep a well-documented journal of things like running self-cleaning cycles or buying new tubing or hoses for stuff around the house.
Another issue is that most of these companies will not cover a home with pre-existing conditions.
That might sound funny, but if you have a 15-year-old furnace in a used home that never got taken care of, your home warranty isnāt going to pay for it.
There are also dollar limit and repair limits per year, so you should be aware of those and how they work in your plan.
Home warranties arenāt as expensive compared to the cost of repairing or replacing most of a homeās essential components and appliances.
But donāt forget that there are going to be periods where you donāt have any breakdowns or wear and tears, but you will still pay a monthly premium.
Lastly, you are stuck with the contractors that the company sends out to you.
There really isnāt any picking and choosing because these contractors have an agreement with the home warranty company already.
Should You Get A Home Warranty?
Remember, just because you have a home warranty doesnāt mean you wonāt have to spend money on home repairs.
Some things wonāt be covered by the warranty because the plan wonāt cover it or you didnāt purchase additional coverage.
There is always a possibility your claim can be denied, and you will still be charged the service fee and be responsible for repair costs.
So, are home warranties worth it?
Well, the National Association of Certified Home Inspectors has an excellent article that shows the average life expectancy of appliances and household components.
You should use this to help figure out how much longer an appliance has so that you can make the correct buying decision.
In the end, if there is any possibility you will have an issue that needs to be repaired, you should probably have a home warranty.
There are plenty of people that suggest just saving your own money for repairs.
However, most of us just arenāt great at saving for emergencies or retirement, let alone for house repairs.
THE SIMPLY INSURANCE WAY
Home Warranties made easy.
Agents not required.
Get quotes and sign up online without talking to an agent. But, we are here if you need us.
Unbiased, expert advice.
Get unbiased insurance education from licensed experts and also avoid dodgy sales calls.
Coverage in minutes.
You can get a home warranty within minutes of getting your quotes and applying online.
Taking Action
Hopefully, I have helped you with deciding if you should get a home warranty, there is no reason not to get this type of coverage.
Home warranty plans are pretty affordable and well worth the small investment into your household items.
There is no reason to wait around for something to break, you can check out some home warranty rates by click the button above and also get immediate coverage.