When it comes to home warranties, there is a lot of misinformation out there. Many people don’t understand what a home warranty is or what it covers. Home warranties are becoming more and more popular among homeowners, with a range of advantages that can be quite useful. The worldwide home warranty service market was worth $7.3 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 6.3 percent from 2021 through 2030 when it’s expected to reach $13.6 billion.
This article will break down everything you need to know about home warranties. We will start by explaining what a home warranty is and then talk about the different types of coverage that are typically included in a policy. Next, we will compare home warranties, homeowner insurance, and manufacturer warranties. Finally, we will discuss the benefits of having a home warranty and how much they cost on average.
What Is a Home Warranty and What Does It Cover?
A home warranty is a service contract that helps cover the cost of repairs or replacements for appliances and systems in your home. Most home warranties are purchased by homeowners when they first buy their property or during escrow. Home warranties typically last for one year and can be renewed at the end of that term. Some companies offer multi-year contracts, but those are less common.
There are two types of goods that a home warranty covers:
- Appliance warranties: These cover the repair or replacement of major appliances, such as your refrigerator, oven, dishwasher, garbage disposal, washer, dryer, microwave, water heater, etc.
- Systems warranties: These cover the repair or replacement of major systems in your house, such as your heating and cooling systems, plumbing, ductwork, electrical system, and more.
It’s important to note that a home warranty is not the same as homeowner’s insurance, which covers damage from events like fires, burglaries, and natural disasters. Home insurance does not cover repair or replacement costs for appliances or systems in your home.
A home warranty also differs from a manufacturer’s warranty in that it covers items that are not new. For example, if your washing machine breaks down after you’ve had it for five years, a home warranty would cover the repair or replacement costs, while a manufacturer’s warranty would not. Most home warranties cover major appliances like refrigerators, ovens, dishwashers, washers and dryers, HVAC systems, water heaters, pools, spas, and more.
The home warranty coverage varies from company to company, so it’s important to read the fine print of your policy before you purchase it. Some companies have a small coverage limit, while others will cover almost anything in your home.
What Are The Benefits Of A Home Warranty?
Many wonder whether or not home warranties are worth it and if they should put their money elsewhere. To put their minds at rest, we’ve compiled a list of some of the most compelling benefits of having home warranty coverage:
- Home warranties provide peace of mind: One of the biggest benefits of a home warranty is peace of mind. If something goes wrong with a covered appliance or home system, you know that your home warranty will cover the repair or replacement costs.
- Home warranties can save you money: Another big benefit of home warranties is that they can save you money. The average cost of repairing an appliance is $200, while the average cost of replacing it is $1,000. A home warranty will cover the cost of repairs or replacements, so you don’t have to worry about coming up with the money yourself.
- Home warranties can save you time: If an appliance or system in your home breaks down, it can take a lot of time to find a qualified repair person and schedule the repair. With a home warranty, you simply call the home warranty company, and they will send someone out to fix the problem.
- Home warranties can help you sell your home: If you’re selling your home, having a home warranty in place can be a big selling point. Buyers are always looking for ways to save money, and a home warranty can do just that.
- Home warranties increase the value of your home: In addition to helping you sell your home, a home warranty can also increase the value of your home. A home with a warranty is more valuable than a home without one because it shows that the seller is confident in the quality of their home.
- Home warranties give you access to qualified repair people: When you have a home warranty, you have access to a network of qualified repair people. This can be a big help if you don’t know any good repair people in your area.
- Home warranties increase the lifespan of your systems and appliances: By getting your systems and appliances serviced on a regular basis, you can increase their lifespan. This is yet another way that home warranties can save you money in the long run.
As you can see, there are many benefits to having a home warranty.
How Much Does A Home Warranty Cost?
The cost of a home warranty varies depending on the company you choose, the type of coverage you need, and the location of your home. Most home warranty companies offer different levels of coverage, so you can choose the one that best meets your needs.
The cost of a typical home warranty plan is between $25 and $65 per month (or $300 and $780 per year). Total yearly costs vary from $265 to $1,425, depending on the company and degree of coverage. Aside from the expense of the policy, each time you submit a claim that requires sending a contracted expert to your house, the warranty firm charges a service call fee.
Every time you use your house warranty plan, you’ll be charged a service call fee. The service call fee is generally between $75 and $125, and it covers the expense of sending a specialist to your property to assess the problem.
If you decide to have the item repaired, the service call fee will be added to your total bill. In most situations, using your house warranty plan will still save you money because repair expenses are frequently discounted. Regardless of how many times a specialist must come out, this service call fee should only be applied once by professional home warranty providers.
Let’s assume that your air conditioning system breaks down in the middle of summer, and it will cost $500 to fix. If you have a home warranty plan, all you have to pay is a $100 service call fee, and the rest of the money will be covered by the home warranty. In this case, you’ll save the rest by making use of your home warranty policy.
Usually, the greater your service call charge is, the less expensive your monthly or annual premium will be. The majority of insurers offer a repair guarantee that protects you from having to pay a service call charge more than once in a one-year period if a repair does not work and a contractor has to return. Look for wording in the home warranty contract that specifies how long the time limit is. It’s generally between 30 to 90 days.
What To Look For In Your Home Warranty Plan
Not all home warranty plan options are created equal. Here are some things to keep in mind when you’re shopping for a home warranty:
- Make sure the plan covers everything you need it to cover. Professional home warranty providers will have customizable plans that will allow you to pick and choose what you want to be covered.
- Be sure to read the fine print. Some home warranty companies will try to sneak in clauses that exempt them from having to pay for certain repairs.
- Read the reviews of different home warranty companies before you choose one.
- Compare the cost of different home warranty plans.
- Make sure you understand what the service call fee is and how it works.
- Choose a plan with a repair guarantee that protects you from having to pay more than once for the same repair.
- Ensure that their customer service is available 24/7 and that they have a good reputation.
A home warranty is an important decision, but it doesn’t have to be a difficult one. Keep these things in mind, and you’ll be sure to find the right home warranty plan for you.
Home warranty plans are an excellent way to safeguard your house while also saving money on repairs. If you’re thinking about purchasing a home warranty plan, do your homework and compare different companies. Make sure you understand the coverage and limitations of each plan before making your choice.
Summer has come, and now may be the time to seek an air conditioner, a ceiling fan, a refrigerator, or another appliance covered by a home warranty. At First Premier Home Warranty, we offer repair and service options for a wide range of home appliances. To learn more about purchasing home equipment breakdown coverage and reducing your power bills, contact us directly or request a free quote.