When Should You Consider a Home Warranty?

The best way to ensure that your home warranty is worth it is to know what you want and what the warranty is and isn’t. Based on your financial situation and your home, the benefits of a home warranty may or may not be worth the cost. On average, a home warranty will cost around $500 or more annually. Different warranty providers offer varying coverage and plans for you to choose from. One thing you need to keep in mind is that a home warranty is very different from homeowners insurance. 

What is a home warranty?

A home warranty is a contract of service that will help cover the cost of replacement or repair of home systems like the plumbing system, electrical system, HVAC, or appliances. It isn’t insurance but is considered a service contract. Insurance will protect you from the cost of repair that is associated with the damage to the home’s structure as well as the possessions caused by accidents of a natural occurrence. On the other hand, a home warranty is nothing but an agreement where the warranty company will pay for the partial or full repair or replacement of specific items and systems if there are breakdowns. But there will be a monthly premium and service fee to be paid at the time of the repairs. 

Home warranty coverage

Your home warranty will cover everything that is listed in the contract. It could either be a systems coverage, an appliance coverage, or both. In case of appliance coverage, your dryer, washer, dishwasher, refrigerator, and cooktops will be covered, and in system coverage, your plumbing, electrical as well as HVAC system will be covered. Check out Cinch Home Services blog content on basic home warranty coverage to know exactly what is covered and what is not. There are add-ons you can consider for additional coverage of specific items. This will allow customization of your policy. You can cover the septic system, spa, pool, garage door opener, water heater as well as sump pump as an add-on. 

Home warranty plan exclusions 

If something is not listed in your contract, a home warranty plan will not cover it. This includes manufacturer defects, structural defects, any pre-existing conditions, as well as damage to a system because of bad weather. 

Should you consider a home warranty?

The first thing you need to understand is that there is a difference between a home warranty and a home insurance policy. A home warranty will cover the home systems and appliances in case of a breakdown due to normal use. However, it does not offer liability protection in the event of an accident. It also does not cover personal assets besides the appliances and systems listed in the contract. On the other hand, homeowners insurance will provide you with financial protection in case of damage to the structure of the home as well as your personal possessions due to an act of nature or accident. It will include some type of liability coverage. 

Now, you need to keep in mind that there are pros and cons of a home warranty. Choosing to buy one is a personal choice and is based on your state of mind, financial situation, and handiness. If you buy one, it will give you peace of mind that if something breaks in your home, you will not have to spend a huge amount on replacing it, and a professional will come to your home and fix it. You will only have to pay a small repair fee, and your appliance or system will be fixed. If you aren’t handy and do not want to spend a lot of time looking for a contractor, the warranty can provide ease and convenience. 

When buying a home warranty, you need to read the fine print thoroughly and ensure that it offers extensive coverage. The coverage limits will not fully cover the replacement cost, so you will have to pay out-of-pocket. There could also be service limitations with some companies, and you might not be allowed to choose your own contractors. If you are comfortable with it, a home warranty can save you a lot of money in the long term. 

Whether you are buying a new home or simply want a home warranty to cover the systems and appliances in your current home, compare the available options and then choose a company. Not all companies will offer the same type of coverage. Hence, do your research before you proceed. Buying a home warranty can be a long-term investment in your home. Even if you did not have it for all these years but are upgrading the home with new systems and appliances today, you can consider investing in a home warranty plan.  

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