One of the most nerve-wracking parts about being a homeowner is never knowing when you’ll face unexpected and costly repairs for your home.  A home warranty can sound like a great solution to this dilemma, but is it really worth it?

Home warranties have gotten a bad rap in the past, but like any warranty or insurance policy, the upfront cost could be worth it in the end.  But you do need to read the fine print and understand the terms and conditions!

Read on to learn more about the pros and cons of home warranties and whether it’s something that will fit your particular needs and budget.

What is a home warranty?

It’s a policy where your home’s main systems or appliances will be covered for repair work or replacement. It’s usually purchased through a home warranty company.

A home warranty is different from your homeowner’s insurance or a manufacturer’s warranty on a product. For example:

It will cover the labor to fix a failed part on a product that your manufacturer’s warranty doesn’t.

It will pay for the plumber to fix a broken pipe but not the damage to your home, which your insurance policy should cover.

Therefore, it can work hand-in-hand with other home policies when something goes wrong.

What are the typical home systems covered and yearly cost?

Policy coverage will vary depending on the company you choose. Many companies offer a variety of coverage levels, such as “Gold”, “Silver”, and “Bronze”.

Though you will need to be clear on exactly what your chosen policy covers, here is a list of items often included in a standard policy:

• Heating System
• Air Conditioner
• Ductwork
• Plumbing
• Toilets
• Jetted Tubs
• Water Heater
• Water Pressure Regulator
• Garbage Disposal
• Electrical System
• Fans (ceiling, exhaust, attic, etc)
• Garage Door Opener
• Central Vacuum
• Built In Kitchen Appliances (including fridge and microwave)
• Washer and Dryer

For an additional fee, you can add “extras” to your policy:

• Pool and Spa Equipment
• Outdoor Kitchens
• TVs and PCs
• Generator
• Water Softener
• Whole House Water Filters
• Well Pump
• Septic System
• Sprinkler System
• Sump Pump
• Roof Leaks

In the Knoxville area, one year of standard coverage typically begins at $600-700 and can increase with each add on. There is a small deductible when you make a service call, often around $100.

Who can purchase a home warranty?

While it is most common for a homeowner to purchase a policy at the time they purchase a home, some warranty companies now allow a homeowner to purchase at any time, no longer how long they have lived in their current home. This is great news for those who have had a change in personal circumstances or whose home systems are showing signs of age and wear.

Is a warranty right for YOU?

There are a few circumstances that come to mind in which a home warranty may not be in a homeowners best financial interest.

If you are particularly handy and mechanically minded or don’t mind spending a few hours watching YouTube videos and taking several trips to Home Depot, you may be able to fix many issues yourself. You will still have the cost of materials and if the problem can’t be fixed, the cost of a replacement, but this may be worth the risk.

If you are purchasing a new construction home, most builders offer a standard 1 year warranty on major systems, components, and included appliances. You may choose to add a home warranty after the builder’s warranty expires.

If many of your appliances and systems are beyond their “useful life” (ie. the amount of time an appliance or system can reasonably be expected to operate), you may not have enough eligible items to make this option worth it.

Similarly, if you have a small home with simple systems, you may not enjoy as many benefits from a home warranty. While most homes have a HVAC unit, water heater, range, and refrigerator, if you do not have a garage door opener, a dish washer, sprinkler system, garbage disposal, fans, etc., you may decide the yearly warranty is less beneficial to you.

What do consumers need to know before they buy?

It’s very important to read over the fine print of your contract and understand what is covered and what is excluded. Here are some typical actions to be aware of for standard packages:

• Covers repairs on large systems (heating or air conditioning) but does not always cover replacements (though some do!). Typically, it will help your keep appliances functioning and in working order.
• Likely won’t cover if breakage is due to poor maintenance by the homeowner; typically covers “normal wear and tear” of an item.
• Could exclude certain items – i.e., may cover refrigerator repairs but not the ice maker.
• May not cover items once they reach a certain time period or beyond its serviceable life (i.e., 20+ years old).
• Doesn’t cover pre-existing conditions. Items need to be properly installed, maintained, and in good working condition when you apply for coverage.
• Doesn’t typically cover roofs and exterior items (without an add on).

What happens when I need to have something repaired?

A home warranty company requires you to contact them first when something breaks. They will then contact their service providers to send to your home. They will pay the service provider once the claim is approved. You will typically not control who comes to your home to repair an appliance or major system. That can be a major downside to some homeowners, especially if they have to wait a long time for a repair. If it is important to you to use a specific plumber, HVAC repair man, etc, some warranty companies may allow you to have that provider approved.

If you call a service provider without contacting them first, the company may not cover the repair.

What if something is not covered when I thought it was?

Like any warranty for any other type of purchase, there are times the warranty company can choose not to cover something. That’s why you need to read the fine print carefully!

What do I look for in a home warranty company?

It’s important to find a reputable company that has been highly recommended by others.

• Investigate its long-term history and Better Business Bureau information.
• Compare coverage levels and upgrades to standard packages along with deductibles and service fees.
• Read the fine print in the contract to understand any co-pays and exclusions.
• Understand how you can cancel a contract.

Let me know if you have any questions about getting a home warranty whether you’re a current homeowner or new homebuyer.  Simply email me at melissa@melissazittrealtor.com.