Are Home Warranties Worth it?
When it comes to home warranties, there are a lot of opinions out there. Some people think they are a waste of money, while others believe that they are essential for protecting their homes.
So, what is the truth? Are home warranties worth it? In this guide, we will take a look at both sides of the argument and help you decide whether or not purchasing a warranty is the right decision for you.
What Is a Home Warranty?
A home warranty is a type of insurance that covers the repair or replacement of appliances, equipment, and other items in your home.
Just be careful not to confuse a home warranty with home insurance. Homeowners insurance is a policy that covers the structure of your home in case of damage, while a home warranty company protects your appliances and other possessions. Make sure to find the cheapest home warranty company.
Home warranty companies generally offer two types of warranties:
- Service contracts, which are for major appliances and other items that break down; and
- Systems coverage, which is for major systems in your homes like the plumbing or electrical system.
What Does a Home Warranty Cover?
Keep in mind that home warranty plans vary, so it is important to read the fine print before purchasing one.
However, most home warranties will cover things like plumbing, electrical systems, air conditioning units, and more.
Here are a few examples of what a home warranty might cover:
- The refrigerator stops working
- Your air conditioner breaks down in the middle of summer.
- The washing machine leaks water all over the floor.
- The dishwasher overflows and floods the kitchen.
How Does a Home Warranty Work?
Okay, let’s say your dishwasher breaks. Under your home warranty, you would call the company, and this is what usually happens:
The company will send a technician to your home to diagnose the problem.
If the technician determines that the problem is covered by your warranty, the company will pay for the repair or replacement of the appliance.
If the technician determines that the problem is not covered by your warranty, you will be responsible for paying for the repair yourself.
How Much Does a Home Warranty Cost?
Home warranties typically cost between $300 and $600 per year. However, this price may vary depending on the size of your home, the number of appliances covered, and other factors.
If you’re buying a newly built home, the builder may offer a home warranty as part of the purchase agreement.
The Pros of Home Warranties
There are several pros to having a home warranty:
- Home warranties can be a great way to save money in the event of an appliance or equipment failure.
- They can help you avoid costly repairs, especially if you have a warranty that covers multiple appliances.
- Warranties provide peace of mind, knowing that you are covered in case of unexpected damage or failure.
The Cons of Home Warranties
There are also a few cons to consider before purchasing a home warranty:
- Some warranties can be expensive, especially if you have multiple appliances covered.
- Warranties may not cover all of the costs associated with repairs or replacements.
- They may not be available in every area.
Is a Home Warranty Worth It?
So, is a home warranty worth it? The answer depends on your specific situation. If you have a lot of expensive appliances or equipment in your home, a warranty may be a good investment.
If you are worried about the possibility of unexpected damage or failure, a warranty can provide peace of mind. However, if you are on a tight budget, a home warranty may not be the best option for you.
When is it Worth Getting a Home Warranty?
A home warranty is worth getting when:
- Your appliances are old, and you’re worried about them breaking down - If your appliances are old and you’re worried about them breaking down, a home warranty can be a good way to protect yourself from costly repairs.
- Your home is new - If you’re buying a new home, the builder may offer a home warranty as part of the purchase agreement.
- You have multiple expensive appliances - If you have multiple expensive appliances, a home warranty can be a good way to save money in the event of an appliance or equipment failure.
- You don’t want to pay for costly repairs if something goes wrong - A home warranty can help you avoid costly repairs, especially if your warranty covers multiple appliances.
- Don't have an emergency fund or want to use it for other things - Home warranties can be expensive, but they may be worth it if you don’t want to pay for costly repairs if something goes wrong.
- Don't feel confident that you can fix your home systems on your own when they break - If you don’t feel confident that you can fix your home systems on your own when they break, a home warranty may be a good option for you.
- Want the peace of mind - If you want the peace of mind that comes with knowing you’re covered in case of unexpected damage or failure, a home warranty may be right for you.
When is it Not Worth Getting A Home Warranty?
A home warranty is not worth getting when:
- Your appliances are new - If your appliances are new, you likely won’t need a home warranty.
- You don’t have any expensive appliances - If you don’t have any expensive appliances, a home warranty may not be worth the cost.
- You feel confident that you can fix your home systems on your own when they break - If you feel confident that you can fix your home systems on your own when they break, a home warranty may not be necessary.
- You have an emergency fund - If you have an emergency fund, you likely won’t need a home warranty.
8 Reasons Your Home Warranty Claim May Be Denied
There are a few reasons your home warranty claim may be denied:
1
You didn’t follow the proper procedures when filing your claim
It’s essential to carefully read and follow the proper procedures when filing your claim. Otherwise, your warranty provider might deny your claim.
2
You didn’t have your appliance or equipment serviced regularly
If you didn’t have your appliance or equipment checked out on a regular basis, your claim might be denied
3
The damage was caused by neglect or misuse
You need to make an effort to keep your appliances running smoothly. If you don’t, the warranty provider may deny your claim.
4
The damage was pre-existing
If the damage was pre-existing, you might not be covered.
5
You didn’t have a valid contract
If you didn’t have a valid contract, your claim might be denied.
6
The damage was caused by an Act of God
An example of this would be a torrential storm causing flooding or a tree falling on your house, damaging an appliance. In these cases, the warranty provider might deny your claim.
7
You didn’t report the damage within a reasonable time frame
It’s important to report the damage right away in order to get coverage.
8
You’re trying to use the warranty for something it doesn’t cover
If you’re trying to use the warranty for something it doesn’t cover, as stated in your contract, you will likely not get coverage for it.
How do you Fight Warranty Denial?
If you’re denied a warranty claim, there are a few things you can do to try and get the denial overturned:
File a dispute
You can file a dispute with your warranty provider if you feel that your claim was unfairly denied.
Get help from an attorney
If you’re not able to get the denial overturned on your own, you may want to consider getting help from an attorney.
File a complaint with the Better Business Bureau
You can file a complaint with the Better Business Bureau if you feel that your warranty provider has wronged you in some way.
Submit a claim to your homeowner’s insurance policy
If you have a homeowner’s insurance policy, you may be able to submit a claim for the damage that was caused.
Frequently Asked Questions
1
What is a reasonable time for repair under warranty?
Warranty providers have different policies when it comes to how long they’ll cover the cost of repairs. Most providers will cover the cost of repairs for a certain amount of time after the purchase of the warranty.
2
Are home warranties tax deductible?
The best thing to do is speak with a tax professional to see if the cost of your home warranty can be deducted from your taxes.
3
Do I need to have my home inspected when I buy a home warranty contract?
You do not need to have your home inspected when you buy a home warranty. However, it is recommended that you have your home inspected on a regular basis to ensure that any damages are caught and repaired before they become larger issues.
Home warranties can be a great way to protect your appliances and home systems, but there are a few things you need to keep in mind before purchasing one.
Make sure you know what is and isn’t covered by the warranty, and file a dispute if you feel like your claim was unfairly denied.