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Home » Do You Need A Home Warranty? Weighing The Pros And Cons by: Tara Mastroeni 

Do You Need A Home Warranty? Weighing The Pros And Cons by: Tara Mastroeni 

When you buy a home, its care and keeping need to become a priority. One way to ensure that its systems and appliances are taken care of is by investing in a home warranty. However, while warranties can be the key to easy home maintenance for some, they’re not right for everyone. If you’ve been thinking about getting one for your home, read this first. We’ve listed out the pros and cons to help you decide if getting a home warranty is the right choice for you.

What is a home warranty?

First, it’s important to note that a home warranty is not the same thing as home insurance, nor does it replace it. The two are separate entities. For its part, home insurance is meant to protect you financially in the event of an unforeseen damage to your home in the event of something like a fire or windstorm.

A home warranty, on the other hand, is a policy that protects your home’s major appliances and systems as they age. It’s there to save you money when your water heater breaks unexpectedly or your dishwasher suddenly stops working.

How a home warranty works

A home warranty works similarly to any other insurance policy. Each year that you want to be covered under the warranty, you pay an annual premium. This can range anywhere from a few hundred to a thousand dollars, depending on the size of your home. Usually, homes of up to 5,000 feet in size are covered under the standard warranty. Above that, you have to pay for additional coverage.

Then, each time something in your home breaks down, you pay a deductible. The exact amount of your deductible will vary, according to the terms of your warranty. However, it usually falls between $50-$125. In exchange, the warranty company will send out a service to make the necessary repairs. They will also replace your appliance, if needed.

The benefits of a home warranty

The big benefit to a home warranty is peace of mind. If something breaks, you know that a professional will come out and fix it, no questions asked. For this reason, a home warranty is a good choice for those who are not very handy. It can also be beneficial to new homeowners, and in particular first-timers, who may not be as familiar with how their new home’s systems work.

Additionally, it can be a shrewd money move for those who need to budget carefully or simply like to be ahead of the game with their financial planning. With a home warranty, there are fewer unanticipated costs. You’ll know what your premium costs upfront and you’ll know what your deductible is for any repairs that are covered under the warranty, making it much easier to handle the unexpected.

The drawbacks of a home warranty

The obvious drawback of the home warranty is that not everything is covered. You’ll need to read over the specific terms of your warranty to get a sense of the individual exclusions.

However, one major pain point of most warranties is that they won’t cover items that have not been properly maintained. Since what constitutes “properly maintained” is very subjective, this clause is often the cause of disputes between the homeowner and the warranty company. Particularly if, say, the previous owner did not take care of the appliance and the new homeowner is left hanging.

Another issue, for some, is that each year money is paid upfront under the assumption that repairs will eventually need to be made. However, that may or may not be the case. Some years, everything may work fine, but you’ll have paid the premium, regardless.

Making the decision

A home warranty can be the solution to some of a homeowner’s maintenance concerns, but it’s far from the perfect safety net. Ultimately, it’s up to you to decide whether or not investing in one is the right choice for you and your family.

Be sure to do your research before you take the leap. Read over any warranties that you’re seriously considering purchasing to get a sense of what repairs will and will not be covered under your contract. Then, weigh the benefits and risks.

Blogger: Tara Mastroeni 

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