Are Home Warranty Companies Worth the Money?
August 7, 2010
When you buy a home, you will probably be asked if you want to use a home warranty company to cover repairs to certain issues that might crop up. If you are buying a new home, chances are that the builder offers a one year home warranty automatically. You have the option to purchase a home warranty after that, with warranties covering your repairs a year at a time. You can continue to pay the premium each year, and then only pay a small fee for the service call if you have claims.
For the most part, a home warranty is a service contract. When deciding whether or not a home warranty is right for you, it is vital to understand what is covered. Most home warranty programs will cover what are considered “moving parts”: appliances, heating systems, air conditioning, some plumbing and some electrical. However, most of the time the home warranty company will not cover issues related to poor maintenance of the home, or to bad construction. Carefully read the paperwork to understand exactly what to expect from your home warranty.
Home Warranty Advantages
There are some advantages to participating in a home warranty program. Warranties usually cost between $250 and $600 a year, with many deductibles ranging from $30 to $100. (Some home appliance warranty programs charge premium only, with no deductible.) If you end up with a serious plumbing problem, or if your heating system breaks down, having the home warranty can save you money. If you had a $300 warranty with a $50 deductible, and you needed a new $1500 heating or cooling system, your home warranty policy would save you a lot of money. To get an idea of what a home warranty might cost you – Click here
Home warranties can provide peace of mind when you are living in an older home. Homes that are at least 10 years old, and that have not had any replacements to their “moving parts”, might begin to see more problems. If you own (or plan to buy) and older home, and you are concerned about the cost of possible repairs, home warranty protection might be desirable.
Home Warranty Disadvantages
One of the biggest issues is that some home warranty companies are slow to conduct repairs, and they may deny claims. You may have to fight with the home warranty company to convince representatives that certain repairs and replacements fall under the plan you have. In a lot of ways, it can be similar to dealing with an insurance company.
Another drawback is that you may not need repairs. You could be spending hundreds of dollars a year on a home warranty plan, only to never have a significant repair. By the time you do have a serious problem, it may be that you have paid so much in premiums that it isn’t worth it. You will need to do a cost benefit analysis to determine whether or not the continuing home warranty protection is worth the cost. Chances are, though, that after the first year (if you have a new home warranty), you might want to hold off buying protection until the home is a little bit older.
Home Warranty Companies
There are many businesses offering this service so its best to compare home warranty companies. You will be hard pressed to find a home warranty service that does not have complaints against it. This is because home warranty policies naturally stir up strong feelings — especially if a claim is denied. Some of the home warranty companies that are well-known, national and somewhat reputable companies include:
- Sensible Home Warranty
- Colonial Home Warranty
- American Home Shield
- Old Republic Home Warranty
- 2-10 Home Buyers Warranty
- First American Home Warranty
It is also worth noting that there are regional and state home warranty companies that may have better ratings, such as Blue Ribbon Home Warranty in Colorado, or American Residential Warranty in a limited number of states – to check if they’re available in your state Click here
Home Warranty Reviews
You can find home warranty reviews and ratings online, as well as check with the Better Business Bureau. There will always be complaints, but you can look through reviews and read experiences to get an overall feel for which home warranty company is least likely to cause you problems — and help you figure out whether a home warranty is worth the money in your individual situation.
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