Home Warranties: Are They Worth the Investment?

The Pros and Cons of Buying a Home Warranty: What You Need to Know

At Team Stephens Orren Shepherd, we know that buying a home is a big decision, and deciding whether to invest in a home warranty is another layer of that decision. A home warranty can be a great way to protect yourself from unexpected repair costs, but it's not always a one-size-fits-all solution. Here’s a rundown of the pros and cons to help you determine if a home warranty is right for you.

Pros of Buying a Home Warranty

**1. Peace of Mind
One of the biggest advantages of a home warranty is the peace of mind it provides. Knowing that you’re covered for major repairs and replacements can alleviate a lot of stress, especially in the first year of homeownership. It’s like having a financial safety net for unexpected issues with appliances or systems.

**2. Budget Protection
Home warranties typically cover the cost of repairs and replacements for major systems and appliances, such as HVAC units, plumbing, and kitchen appliances. This means you won’t have to worry about a sudden large expense for a broken refrigerator or a malfunctioning furnace. Instead, you’ll pay a manageable service fee and possibly a small deductible.

**3. Convenience
Most home warranty companies offer 24/7 customer service and a network of vetted contractors. This means that when something goes wrong, you don’t have to scramble to find a reliable repair person. The warranty company handles the logistics, saving you time and hassle.

Cons of Buying a Home Warranty

**1. Cost vs. Coverage
Home warranties can be costly, with annual premiums ranging from $600-$900  or more, plus service fees for each claim. However, the coverage may not always be comprehensive. Some warranties have exclusions and limits on coverage, so it’s important to read the fine print and understand what is and isn’t covered.

**2. Potential for Disputes
Home warranty companies are often known for having disputes over what’s covered. Claims may be denied if the company deems that the problem was pre-existing or due to improper maintenance. This can lead to frustration and unexpected out-of-pocket expenses.

**3. Quality of Service
The quality of service provided by home warranty contractors can vary. While some contractors may be excellent, others may not meet your expectations. Since the warranty company typically selects the contractor, you might not always get to choose your preferred service provider.

**4. Not a Replacement for Home Insurance
A home warranty is not a substitute for homeowners insurance. Insurance covers damage from events like fire or natural disasters, while a warranty covers repair and replacement of appliances and systems. It’s essential to have both to fully protect your home.

Bottom Line

A home warranty can be a valuable investment for some homeowners, providing peace of mind and protection against unexpected repair costs. However, it’s crucial to weigh the pros and cons, and to carefully review the terms and coverage before committing.