If you’re in the process of buying a home or are moving in Austin there’s a good chance you’ve heard of a home warranty. Up front it seems like a pretty good deal – you pay a one-time fee to a home warranty company and you’ll get discounts on repairs and replacement of parts for major appliances and components in your home.
So far, so good. But then you look at the fine print (hopefully). There are a few reasons why more than 50% of Angie’s List reviewers gave their home warranty companies a grade of D or F and why you should think it over before plunking down the annual premium.
Does the Coverage Warrant the Cost?
There are no regulations that mandate what is and isn’t covered in a home warranty or how much it will cost. Those factors are established by each individual company.
Costs
Annual Premium – the average cost nationwide is $250-500
Upgraded package – additional $100-300 (these cover more items or offer more extensive coverage of items in a basic plan)
Individual Items – varies (coverage for a la carte items)
Service Fees – average $50-75
When a pro needs to come out to provide a service a set service fee will be charged. These are usually lower than what you would pay without the home warranty, however it does depend on the repair and the area you live in.
Coverage
A home warranty doesn’t offer blanket coverage. Only the specific items stated in the contract will be covered and even then it may not be 100%. Items that usually fall into the coverage categories of most home warranties include:
- Oven/Stove
- Dishwasher
- Washer
- Dryer
- HVAC
- Refrigerator
- Furnace
- Plumbing
Usually pools or spas are an item that can be added on to a plan, or they are sometimes included in the top-tier, upgraded packages.
Keep in mind that not every part and repair is covered for an item. There may be exclusions even if an item is on the covered list so read the coverage section very carefully. They also won’t cover pre-existing conditions so if it is on the inspection, don’t expect it to be covered.
IMPORTANT NOTES:
A home warranty is not a substitute for homeowners insurance and will not cover your property in the event of a fire, flood, natural disaster, robbery, etc.
Claims can be turned down by a home warranty company if there is reason to believe it isn’t covered in the contract.
What to Consider Before Signing a Home Warranty Contract
Now that you have a better idea of the costs and coverage of home warranty plans it’s time to decide whether you really need one or not. The questions below will help you determine if a home warranty plan is really worth the cost.
- How likely is it that appliances or components will fail?
- What are the average service fees for fixes in your area?
- Is having control over choosing your repairman more important than cost?
- Would you rather have someone else handle the contractor hiring and scheduling?
- Are you, or someone you know well, handy?
- What would have to fail in a year’s time to make the annual premium and service fees worth it?
If you’re buying a home by all means try to get the seller to cover the cost of a home warranty. It will give you added protection that doesn’t cost you a dime. But you still need to read the bottom line to make sure you won’t get stuck with unforeseen expenses during the plan or once it’s initial timeframe expires.