Life as a homeowner is expensive. Many homeowners are reluctant to take on additional costs unless absolutely necessary. As home warranty plans become more popular, many people find themselves asking the same question: Are home warranties worth the money?
With the right plan, a homeowner’s savings on repair costs can easily exceed the cost of the warranty itself. In other words, a home warranty can essentially pay for itself. There are also indirect benefits that are worth considering. In this article, we’ll examine home warranty plan costs and compare these to a warranty’s benefits to show how warranties are worth it for the average homeowner.
A home warranty or home protection plan has two main costs: the premium and the service fee. The premium is a monthly or yearly fee to keep the contract active. The service fee is a bill of around $75-$150 whenever you submit a claim.
A warranty policy is not meant to be one-size-fits-all. There is significant variation in coverage, which means significant variation in price. A low cost home warranty with a premium of around $300 for the year may cover only a home’s major appliances, such as the refrigerator, dishwasher, and washing machine. A more comprehensive plan that also covers a home’s plumbing, electrical, and HVAC systems could have a premium of about $600 for the year. A plan with add-on coverage for pools, septic tanks, and other less common items could have a higher premium still.
Some companies, however, may have less obvious costs. There could be hidden fees, or the company may have an unreasonably low cap on the amount it will pay out if an appliance or system needs to be repaired or replaced. This is why it’s important to find a reputable, honest company if you’re interested in a home warranty.
Now that we have a general idea of how much a warranty can cost, let’s look at some of its primary benefits.
Now consider an example. Imagine you purchase a home appliance warranty with an annual premium of $400. Let’s say you submit a claim twice in the year, paying $100 each time. This means your out-of-pocket expenses were $600 for the year. If one of those claims was to repair a malfunctioning freezer compressor—a pricey job—then you have likely paid less through the home warranty than if you had fronted the repair costs yourself.
So, are home protection plans worth the money? For most people, the answer is yes.
Careful research and planning can maximize your savings. Find trustworthy companies that will provide honest service. Don’t purchase a plan that covers items you don’t own. Consider that you may not need coverage for brand new appliances that are already protected by manufacturers’ warranties, and you may not need coverage for systems in a newly built home with a contractor’s guarantee.
Liberty Home Guard can talk you through the ins and outs of home warranties. We’re happy to work with you to find the right warranty for your property. Call us today at (833)-544-8273.
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