Home Warranty Basics: Are Home Warranties Worth It?

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As the current global crisis forces people to physically distance themselves from others, everyone is spending more time at their homes. While it has given us more time for relaxation, spending more time in our living spaces can put a strain on our home appliances and systems. Breakdowns are more common because of frequent wear and tear. This often results in repair and replacements, which can be very expensive when you add them up.

Homeowners these days turn to building services consultants for a comprehensive assessment of home systems that require maintenance and operational improvements. This ensures the comfort, energy efficiency, and facility performance of a property. Meanwhile, first-time homebuyers apply for home warranty plans to cover associated costs if something goes wrong in their homes. It helps them reduce the risk of unexpected expenses if a certain system or appliance fails.

Costly repairs are every homeowner’s greatest worry. Paying for a broken appliance is the least of their priority as they face other bigger expenses at home. But applying for a home warranty plan may save you against unforeseen repairs and expensive replacements. If you want to know whether you should apply for a home warranty, this article will discuss what a home warranty means, its coverage, and benefits.

What is a home warranty?

A home warranty is a form of consumer convenience product that covers repairs and replacements of major system components and home appliances. This may result in standard usage, failure, and other issues that may occur because of age and frequent wear and tear.

Many people confuse a home warranty with a homeowner’s insurance. The difference between the two is that home insurance protects your belongings and your home from catastrophic damage or loss because of theft, storms, fire, and other natural causes. Meanwhile, a home warranty offers protection against the daily occurrences that can go wrong in your home.

Home sellers often avail of a home warranty plan as an additional benefit for the homebuyer. The home seller usually pays for the coverage because the homebuyer will no longer contact them after the deal if something breaks in the home. Real estate agents may present a home warranty as a gift to their clients after successfully closing a deal.

Availing of a home warranty costs several hundred dollars each year, which you can pay upfront or in installments. The cost of the plan may vary depending on the building type, from duplex, townhouse, condo, or single-family detached.

What does a home warranty cover?

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A home warranty typically covers most large home components and systems, such as electrical, plumbing, water heaters, and HVAC. It may also include regular appliances, such as stoves, refrigerators, dryers, and washers. When a component breaks down, the home warranty covers the repair, service, or replacements.

When applying for a warranty, you’ll want to inquire about the coverage of a specific plan since all plans vary greatly. You may also ask the real estate agent or home seller if upgrades are possible. But don’t forget to read the fine print to prevent unpleasant surprises if a certain appliance ends up uncovered.

Unfortunately, a home warranty does not cover all types of repairs. Most companies almost always disqualify some equipment malfunctions. These include pre-existing conditions, damages caused by improper maintenance and installation, cosmetic issues, and system misuse.

What are the benefits and drawbacks of a home warranty?

Like any warranty, a home warranty seeks to protect the homeowner against unforeseen and expensive repairs and ensure peace of mind. Homeowners with no emergency fund or plans to use it for more important expenses, a home warranty will act as the buffer. It is also helpful for homeowners who lack handyman skills or don’t have the time to look for contractors in the event of damage. Homeowners with expensive tastes in home components will also benefit from home warranties.

The major drawback of a home warranty is that it doesn’t cover appliances that lack proper maintenance. Often, repair coverages cause huge disagreements between warranty holders and home warranty companies. If you end up hiring an unscrupulous warranty company, they may use an improper maintenance clause to deny legitimate claims. Also, homeowners don’t have the assurance if the company hires an expert contractor to fix the repair.

Homeowners or home sellers who are planning to get a home warranty should carefully consider if the warranty plan pays off for the unforeseen risks and repairs at home. That is why it is important to do careful research to hire a reliable home warranty company that will actually cover legitimate repairs and replacement costs when you need them.

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