Should You Purchase a Home Warranty?
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When you buy a home, you’ll typically be offered the option of purchasing a home warranty. For many buyers, though, the concept of a home warranty is confusing. Is it worth it? Will it pay off in the end? Here’s everything you need to know to decide if this option is right for you.
What is a Home Warranty?
A home warranty is essentially a written contract between the purchaser of the home and a designated home warranty company. This contract provides discounts on the repair or replacement of a home’s systems, like the furnace, HVAC, plumbing, or electrical systems. In some cases, a home warranty will also provide for the purchase of large appliances.
A home warranty is not, however, a substitute for homeowner’s insurance. While a homeowner’s insurance policy covers damage from fires, crimes, natural disasters, and more, a warranty only covers a handful of the home’s specific components.
What are the Benefits of These Policies?
Deciding whether to purchase a home warranty comes down to understanding the benefits and drawbacks, and then deciding if the good outweighs the bad for your situation. Here are a few of the perks:
- Home warranties can help protect against unforeseen repair expenses
- Warranties can provide peace of mind for homeowners who don’t have emergency funds.
- Home warranties are ideal for people who aren’t “handy” and don’t want to repair their home’s components on their own
- Home warranties can cover or offer a discount on expensive appliances
While there are many benefits to a home warranty, there are also several drawbacks. These are as follows:
- Home warranties only cover items that have been maintained correctly. This is often a gray area when it comes time to file a claim
- Warranties have many exclusions that can limit their usefulness and accessibility
- Home warranties can be expensive if they’re never used
- Home warranties limit a homeowner’s choice of contractors
Is a Home Warranty Right for You?
While home warranties have lots of drawbacks, they can also be a good idea. If you’re considering purchasing a warranty on your home, be sure to read the fine print of the terms before committing. Not only will this help you make an educated purchasing decision, but you may discover weak points that render the warranty useless for you.
When considering whether to buy a warranty, the biggest question should be whether it will pay off for you or not. If you choose to purchase one, find a reputable home warranty company that pays claims and will work with you to help you get the most from your warranty policy.
