The Basics of Home Warranties

Many homebuyers have the choice of whether to purchase a home warranty with the home itself. While not required, it can be a helpful way to ensure that your new home is well cared for. It can also have some downsides and may not be right for everyone. Here we’ll go over the basics of home warranties to help you understand whether it’s something you should consider.

How Do Home Warranties Work?

A home warranty differs from home insurance. Home insurance offers financial protection in the case of unexpected damage from major issues like fires or storms. Home warranties protect and pay for the appliances in your home. You pay for your home warranty similarly to paying for insurance: an annual premium priced based on the size of your home. If an appliance breaks, you pay a deductible and the warranty provider will send somebody to help with maintenance or replace the appliance entirely. The deductible amount varies depending on the warranty terms, so it’s something you should look into carefully when considering your options.

Why Get a Home Warranty?

Home warranties offer major peace of mind. With a home warranty, you know that if an important appliance breaks that you have access to a professional who can fix it. This can provide you the extra support you need if you’re not very handy or are a brand new homeowner. A home warranty also allows you to budget more accurately by avoiding unexpected repair costs. You’ll always know the regular premium cost and any deductibles for repairs ahead of time.

The pricing on home warranties varies from one company to the next, but has low upfront costs. Even with the deductible, they can help you save hundreds of dollars on major repairs or even replacements. You’ll have professional backup in the event of catastrophic plumbing or electrical failure which are often impossible and unsafe to DIY repair.

Why Not Get a Home Warranty?

The main issue with home warranties is that not everything is covered. It’s crucial to read the specific terms of the warranty and note which appliances it does not include in the coverage. This can help you weigh your options and determine whether it’s worth it for your situation. A problem many homeowners run into with home warranties is that even with a covered appliance, it can become ineligible for coverage if not properly maintained. Unfortunately, “properly maintained” is different for every provider and can cause conflicts and confusion. It also might not cover you if a previous owner neglected basic maintenance on an appliance before you moved in, leaving you paying full price for somebody else’s mistake.

Home warranties are definitely worth it for some buyers and superfluous for others. They can provide some added comfort in knowing you have resources available for emergency maintenance when something breaks, but it won’t cover everything in your home. It’s important to research different warranty offerings carefully before deciding. This way you’ll know what risks and benefits to expect.