What Should I Know Before I Purchase a Home Warranty?
For most people, purchasing a home is the single largest investment we ever make; one that will impact our finances for decades. This is why we feel so protective of our homes. Not only do we want to feel physically safe and comfortable, but we also want our finances to be secure as well.
We work hard to purchase a home and now we need to make sure to maintain it and hopefully help it grow in value. One financially wise way to guard your budget is to purchase the best home warranty in Arizona. But before you get serious about buying one, it’s good to understand how it works and whether it makes sense for your needs.
The Basics of a Home Warranty Plan
Homeowners insurance covers your home and property in the event of a catastrophic event or an emergency. A home warranty covers items that break down because of wear and tear and other unforeseen situations. A warranty is a voluntary purchase while homeowners insurance is required to secure a mortgage loan. A warranty lasts for a year at which point you can renew the plan and continue coverage. This plan is an agreement with a service provider that states when you pay a monthly or annual fee, a repair company will assess the problem and then repair or replace the broken home appliance or system. There will be no out-of-pocket costs except for a service call fee, which is usually around $100.
Know What It Covers
A home warranty is a comprehensive plan that protects you from having to pay for repairs or replacements of a number of home conveniences. The plan can cover appliances such as refrigerators, built-in microwaves, ovens, stoves, dishwashers, washers, and dryers. It can also cover your HVAC system, including the ductwork, furnace, and air conditioner. Some plans include the garbage disposal, sprinkling system, plumbing and even your swimming pool if you have one.
Know the Costs
Home warranty plans can vary in pricing depending on the company you go with. An average price is around $500 a year for coverage, depending upon what area of the country you live in. You will likely have the option of paying it all up front or breaking it up into monthly payments. There’s typically a cost-saving if you pay the lump sum annual amount.
Know What It Costs to Pay for Repairs
Before you decide whether a home warranty plan is worth it, you should know how much it would cost to repair or replace various items that break down. These costs can be steep, sometimes reaching thousands of dollars. For example, an overhaul of the plumbing system could be as much as several thousand dollars. Installing a new HVAC system could be as much as $10,000. Other repairs are much less expensive. A broken dishwasher or refrigerator may only need a new compressor or motor, which should run you a few hundred dollars. Be mindful that these costs can vary depending on your model.
Decide If You’re up to Fixing Things Yourself
If you’re a do-it-yourself kind of person, it may not be in your best interests to get a home warranty. If you’re mechanically inclined and handy, you may be able to find solutions to the appliance problems without hiring a repairman. If you don’t have the skill, interest, or time to tackle repair issues on your own, buying a warranty may be a good move.
Know the Challenges of Having a Home Warranty
On the surface, buying a home warranty plan may seem like a no-brainer. However, there are disadvantages to buying one and it may not make sense in all cases. One frustration that people experience is that sometimes it can take a while for a service technician to make it to your home. This can leave you without some conveniences for a time. Also, you are at the mercy of the warranty company when it comes to who fixes your appliances and systems. The companies have agreements with certain service technicians. It may turn out that you are not fond of the service provider. Also, some warranties have dollar limits as to how much is covered per appliance. Be aware of these factors before you decide to purchase a warranty.
Know What the Warranty Won’t Cover
Last, a home warranty plan won’t cover everything in all cases. The item in question can’t be inoperable because you used it incorrectly. You also can’t deliberately break something and expect coverage. Items that break down because you neglected to properly maintain them also won’t have coverage.
As you understand how a home warranty works, you can be prepared to make the right decision. Review these guidelines to have peace of mind in whichever direction you decide to go in protecting your home and appliances.