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What to Evaluate When Choosing a Home Warranty

Anytime you make an expensive purchase, you should make sure you have a warranty. When you buy a car, a television, a refrigerator or a mattress, the manufacturer and often the retailer provide warranties to ensure you don’t return a broken product – or worse, sue.

Houses also come with warranties, but few homeowners know about them. Home warranties safeguard various systems around your home from dysfunction due to wear and tear, unlike insurance which protects your home and you from disastrous accidents. Usually homeowners gain a year’s worth of warranty from the sellers, who offer the warranty as a sign of good faith regarding the condition of the home. However, once that expires on your home, you might strongly consider renewing it yourself.

If you are shopping for a home warranty – whether on the home you plan to live in or a property you expect to sell – here are a few qualities you should consider in your home and in prospective plans.

Can You Do Maintenance on Your Home Yourself?

If you are a professional handyman or even if you merely feel comfortable fixing and replacing broken-down systems and appliances in your home, you might not have much need for a home warranty. Home warranty companies contract professional service providers to visit your home, inspect issues and repair or install replacements; they won’t reimburse you for any of your own supplies or effort.

Still, if there are some fixes you feel comfortable performing and other maintenance that is beyond your ken, a home warranty might be a smart investment. You should discuss what you want covered with your provider and see if performing some maintenance tasks yourself will reduce your home warranty costs.

How Much Are You Willing to Spend on a Warranty?

Speaking of costs, you should understand your home budget and know what you are willing to spend before you sign any warranty agreements. In fact, having a relatively strict home budget will help you with your personal finance goals, like saving for vacations or investing in retirement, as well as help protect you against unexpected disasters and necessary repairs.  

Though how much your warranty will cost depends on what you want covered in the plan – e.g. more expensive systems like roof, plumbing and electrical are often extra – you should expect to pay between $350 and $500 per year for your warranty. Most home warranties are paid annually, but it is possible to create a monthly or quarterly payment plan. All of this is important to input into your budget as you determine what features are necessary and what you can afford.

How Would You Describe the Current Condition of Your Home?

If you say anything other than brand-spanking-new, you need a home warranty. New construction homes often come included with their own version of home warranties; construction companies or realtors usually ensure 10 years of structural integrity, which means coverage for elements like stucco, drywall and even paint as well as traditional systems like HVAC and electrical. Newer homes also usually have newish appliances, which come with long-lasting manufacturers’ warranties.

If your home can be considered old – 10 years or more since construction – you should invest in your own home warranty. This will keep you safe in case the seller or realtor were less scrupulous or utterly unaware of significant issues with various systems around your home.

Do You Plan to Upgrade or Renovate Anytime Soon?

If you bought an old home just to gut it and remodel, you might still want to invest in a home warranty. Renovations rarely manage the structural systems of your home, like the electrical, HVAC, plumbing or roof, so it is wise to have a policy that will protect you if those systems go awry. Fortunately, if your remodel includes updating your appliances, you can probably skip coverage on these because the manufacturer will offer their own, superior warranty.

What Are the Customer Reviews of Various Warranty Providers?

 

Once you know what you want and need in a home warranty, it is time to shop. Looking at costs and plan features is important, but just as important is investigating consumer ratings and reviews. Through other customers’ experiences, you will better understand how certain warranty providers handle claims and provide customer service. You can also look into warranty providers’ reputations through the Better Business Bureau and on social media sites. Companies with low ratings should likely be avoided, even if they have rock-bottom prices.

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