Should I Buy a Home Warranty When Buying a House

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If you are the kind of person who does not want to worry about hiring a contractor for house repairs or has a limited monthly budget, that will fail if you have to invest in the repairs that your house desperately needs. Then, without a doubt, investing in a home warranty when buying a house is the best decision that you can make. 

Owning a house is the biggest dream of an individual. A place that you can go to after a long and stressful day and shut the front door to all the worries in the world. Due to easy payment plans, this dream is not hard to achieve nowadays, but the real challenge begins once you have made the purchase. House is a property that needs constant care and maintenance, and these massive maintenance costs will surely get you thinking that “was it worth chasing this dream?”

What is a home warranty?

A home warranty is just another form of insurance that covers your major home appliances and systems. Home appliances can include your dishwasher, washing machine, dryer, refrigerator, garbage disposal, etc., whereas home systems include your heating, ventilation, air conditioning (HVAC) systems, furnace, water heater, plumbing, etc.

Home warranty companies provide you with different plans. In general, there are three plans that they offer:

  1. Home appliances coverage: This plan only covers your home appliances; you can choose which appliances are included in the warranty.

  2. Home systems coverage: This plan covers your home systems and gives you the freedom of choosing the procedures you want to be insured.

  3. Combinational plans: This type of plan allows you to choose certain home appliances and major home systems to be insured in a single plan. This is the most common plan people invest in.

How does the home warranty work?

You can buy a home warranty on a home purchase, or you can sign up for one later on. But here’s how the process goes:

  1. Choosing the plan: Whichever company you choose, they will provide you with specific plans. Now, you have the choice to choose from these plans the one that suits you the best.

  2. Coverage begins: After you have signed up for the plan, it will usually take home a warranty almost a month before it begins. Companies take this time to avoid any kinds of fraud, and they do not charge your credit card in this time span.

  3. Making a service request: Making a service request is as easy as just calling the company or filing a request online on the company's service portal. Most companies have online service portals that will require you to fill in some details regarding your problem, and the company will call you themselves.

  4. Call from the company: Once you have received the call from your home warranty company, you can make an appointment, and the company will send a contractor on the agreed date to do the repairs. 

Deductibles:

Deductibles are small fees that the owner has to pay whenever they claim the insurance. Deductibles have to be paid with all types of insurances, same is the case with warranty. Once the repair has been done, you will have to pay a deductible. The deductible for home warranties lies between $50 to $150 dollars.

Difference between homeowners insurance and home warranty:

Homeowners insurance and home warranty are both insurance plans that you can buy while buying a home. The difference lies in what these plans can cover.

Homeowner’s insurance coverage:

Homeowner insurance ensures the actual building structure of your home. This insurance includes the following coverage areas:

  1. The structure itself: Any damage to the building’s structure is covered by homeowner insurance.

  2. Fencing: It also covers any damage to the fences.

  3. Pipes: Your complete waterline system is covered by this insurance.

  4. Foundation: foundation damages cost the most to be repaired, and homeowner insurance also covers those expenses. 

Home warranty coverage:

As discussed above home warranty covers two things:

  1. Home appliances

  2. Home systems

Isn’t homeowner insurance enough?

As we can see, homeowner insurance covers many major areas, so the question arises, should I get a home warranty when buying a house? To answer that question, let me ask you one, how often does your house suffer from major structural and foundational damages? The answer is not often.

But, home systems and home appliances are the things that require constant maintenance and, more often, repairs as compared to your house's structure. Therefore, investing in a home warranty when buying a home is worth the extra hundred dollars because you will be using it more often than your homeowner's insurance.

Home warranty average cost:

Depending on the kind of coverage your home warranty plan offers, the price varies. But mostly the home warranty costs around $300 to $600 a year.  Most home warranties will last for one year, and once your contract expires, you can renew the warranty. 

Is a home warranty worth it?

It all comes down to this million-dollar question, and t0o be honest, the answer is not the same for everyone. A home warranty, although it has many perks, it is not suitable for all clients. Buying a home warranty depends on your needs. For example, if you have a condo that has an area between 600 to 1500 square feet, there is very little chance that place of such area will require much maintenance, and even if something does go wrong, then it will cost much less as compared to fixing problems on much bigger properties.  

Therefore, the answer varies from owner to owner and place to place. So, before buying the home warranty, you should not ask, "Is it worth it?” instead, you should ask, “Is it worth it for you?” If the answer is yes, you should invest in it, and then you don’t have to worry about extra repair expenses until your warranty lasts.

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