When you buy a home, you want to protect it as thoroughly as you can. Homeowners insurance only provides one layer of protection for homebuyers. A home warranty plan provides additional peace of mind and financial protection — or it might be an unnecessary expense.
Home warranty plans are relatively affordable, costing between $300 and $600 per year, depending on your area, home size, and home warranty plan coverage. When using home warranty plan coverage, you’ll pay a flat service call fee of around $70 for each visit by a service provider. For most homeowners, it proves to be a cost-effective way to take care of repairs.
Before investing in a home warranty policy, it’s important to consider a few factors. This article will examine how the age of your home, your remodeling plans, and home maintenance records affect whether you should acquire home warranty coverage.
When Was Your Home Built?
If your home was built within the past 10 years, you may not need a home warranty plan.
This is because most states require builders to warranty a new home’s structural elements for a decade, which prevents construction firms from performing shoddy work for high profits.
These protections cover home systems like windows, central air conditioning, HVAC systems, plumbing systems and electrical systems — that is, everything that a home warranty contract would likely cover.
Your brand new home is likely covered for a few years by this builder’s warranty, and purchasing additional coverage with a home warranty plan might not be worthwhile.
When researching when your home was built, you might also look into when major systems around your home were last updated. Home appliances and home systems have a lifespan. For instance, previous owners might have installed a new HVAC system, water heater, or washer just before you moved in. Every major appliance comes with at least one year of manufacturer’s warranty, and homebuyers can often increase their warranty by buying during certain times of year or using certain payment methods. If most of your major appliances are still under manufacturer’s warranty, you may not need — for now — a home warranty policy.
However, the opposite is true, too. If your home is older than 10 years and has not received new major appliances or home systems in some time, you are an excellent candidate for a home warranty plan. Older homes aren’t covered by any sort of warranty except existing individual major appliance warranties. Homeowners insurance is not a warranty, so if you invested in a fixer-upper, you should strongly consider acquiring home warranty coverage from a reputable home warranty company.
Do You Expect to Remodel?
By using a contractor, you should receive much of the same additional coverage that you would if you bought a new home.
Reputable contractors stand by their work by offering a warranty. This warranty will likely take the form of a one-year, no-questions-asked correction period as well as about five years of warranty, in which you are responsible for proving a breach of contract.
If you expect to remodel without using a contractor — that is, using your own DIY savvy — then you might want to research home warranty companies and invest in a home warranty plan well beforehand. This will allow you to take advantage of your home warranty coverage to update major systems that break down over time from normal wear. Meanwhile, you can allocate your budget towards addressing aspects of your home not covered by the home warranty plan, such as the rotting deck or the unattractive façade, rather than facing high repair costs for your home systems.
How Diligent Are You at Maintenance?
A home warranty is a type of insurance that covers repairs and replacements of home systems that have been maintained. Home warranties cover systems such as HVAC, water heaters, electrical systems, plumbing systems, and air conditioning, as well as various types of home appliances.
As explained above, a home warranty covers the normal wear and tear of these major systems and home appliances in your home. However, a home warranty policy won’t cover you if you don’t demonstrate regular maintenance of your systems. Home warranty companies expect you to keep your home appliances and major systems in good working order.
For instance, if you don’t change your HVAC system air filters, if you don’t flush the sediment from your water heater, if you don’t clean your fridge and range, and if you don’t prevent clogs in your plumbing system, your home warranty provider won’t pay for repair or replacement costs. Make sure you read the fine print of your home warranty contract and familiarize yourself with the exclusions.
If you aren’t diligent about home repairs and maintenance of your major systems and home appliances, you should hire someone who is.
A regular home checkup from a trustworthy handyman should keep your property in top shape and make sure that your home warranty coverage remains in effect. Without home warranty coverage, home repairs and replacement costs can leave you with substantial out-of-pocket expenses.
However, you should know that previous lapses in maintenance might also negate your home warranty policy. So before you buy your home, homebuyers should ask for an in-depth review of the previous homeowners’ home systems maintenance schedule. If there are any indications that they weren’t meticulous in their maintenance, you might want to discuss your options with your home warranty provider. A home inspection detects possible home repairs needed to major systems and can be quite helpful. Your real estate agent should be able to provide a recommendation for you.
Should You Buy a Home Warranty?
A home warranty plan is a good investment — for some homeowners. For others, it is a needless expense of homeownership since other types of protection such as a builders warranty or home insurance cover their real estate.
Look into your property’s home insurance policy so you can decide whether to invest in a home warranty policy. Consider the deductible amount and any limitations and exclusions on coverage. These factors can help you to see if there are gaps in coverage that a home warranty policy could fill. A home warranty plan typically covers major appliances, HVAC systems, and plumbing systems. By comparing the benefits and costs of both homeowners insurance and home warranty plan options, you can make an informed decision about protecting your investment and provide peace of mind for the future.
Frequently Asked Questions
Are home warranty plans affordable?
Yes. A home warranty plan costs between $300 and $600 per year, depending on your area, home size and home warranty plan coverage.
What is a builders warranty on a new home?
Most states require builders to warranty a new home’s structural elements for a decade.
These protections cover home systems like windows, central air conditioning, HVAC systems, plumbing systems and electrical systems — everything that would likely be covered by a home warranty contract.
Should I buy a home warranty?
For most homeowners, a home warranty is worth the protection and peace of mind. There are instances when a home warranty will not provide additional coverage such as when purchasing a new construction home.
