By Home Media
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Whether or not a home warranty is worth it is a question many homeowners ponder at some point, especially if their house’s systems or appliances are older or wearing down.
In order to help you make a wise decision, we discuss important factors to consider that are relevant to a home warranty purchase such as the cost of home repairs, the cost of a home warranty and the pros and cons of owning a home warranty.
In this article:
In order to determine whether or not a home warranty is worth it for you, it is important to know what the cost of some of the most common home repairs and replacements are. The table below shows the cost of repairing or replacing some of these common items, according to House Method.
Many of the appliances and systems you need in your home are not cheap. This is especially the case when you have to replace them instead of repair them. Each of the five items in the table below costs at least $1,250 to replace, while the repair costs are at least $150. These are just a few of the many appliances and systems in your home that you might have to repair or replace, and it is not uncommon for multiple items to break down or need repairs in the same month.
A home warranty is a service contract that gives homeowners a way to avoid expensive repair bills. For example, replacing your heating system would likely cost over $4,000. The vast majority of Americans would not have the money to replace this system if it broke in their home.
Instead of having to pay for repairs or replacements out of pocket, home warranty companies charge you a monthly premium and a service call fee every time you need a repair. In the heating system example we just used, you would simply pay your service fee (roughly $75 to $125) to have a certified technician come repair or replace your heating system.
Most home warranty companies will send a technician within 24 to 48 hours to repair or replace your system or appliance. Reputable home warranty companies operate their claims center 24/7 so they can get a repair person out to your house as quickly as possible. These companies also tend to provide emergency services in case an appliance or system needs an emergency repair.
By owning a home warranty, millions of homeowners have peace of mind that their appliances or systems breaking down will not also break their bank accounts. Similar to health insurance companies, home warranty companies do set their prices to an amount where it is probable that they will make more money off of your payments in the long run than they will spend servicing your home. However, most homeowners who own a home warranty are aware of this fact and still believe their home warranty is well worth it.
The cost of a home warranty depends on a variety of factors, including the provider you purchase your warranty from and the specific home warranty plan you purchase. As mentioned before, home warranty companies charge you a monthly premium, which you pay every month.
They will also charge you a trade service fee, which you will only owe when you need a repair or replacement of your system or appliance.
The average cost of our three best home warranty providers’ monthly premium and service fees is listed in the table below. As you consider these companies for your home warranty needs, also consider factors such as each company’s state availability, breadth of coverage in each plan, quotes and claims processes and customer service. For more detailed information on each of these specific providers, consult our individual provider reviews, and learn about our methodology at the bottom of this story.
Now that you understand what a home warranty is, the cost of a home warranty and some of the benefits of a home warranty, it is also helpful to know some of the cons of owning a home warranty. We created a pros/cons table for you to examine the pros and cons simultaneously. While you are looking at this table, consider your personal financial situation and whether it affects any of the pros/cons listed below.
Whether or not a homeowner needs to purchase a home warranty or not is a personal decision. Like choosing to not purchase health insurance, you are taking a gamble if you decide not to purchase a home warranty. You could potentially save money by not purchasing a home warranty, but it’s risky.
To our review team, purchasing a home warranty is advisable for the vast majority of homeowners because they often don’t have thousands of dollars in savings intended for expensive, unexpected home repairs. On the other hand, for our readers who do happen to be very wealthy and have thousands of dollars in savings, it may not be worth it to buy a home warranty since it typically costs a bit more in the long run than not buying one.