Home Warranties: What is it, and is it Right for You?

This week we have an interesting guest post from Mike Thomas who is a private contractor for HomeWarrantyDeals.com. He states he enjoys DIY projects, college football and is also “deeply passionate about restoring antique homes.” With no further ado…

When I mention my past contracting work with home warranty companies in conversation, I often get a lot of raised eyebrows and puzzled looks. Many have never heard of home warranties, and those that have frequently misunderstand their function and purpose.

Most frequently, home warranties get confused with home (or homeowner’s) insurance. The mix-up is understandable, but in reality these two products are really quite different, though they do complement each other well.

• Home insurance, as most people know, protects the owner of a structure from most causes of unexpected damage. If a home or other structure is well-insured, then the insurance policy will cover most or all of the cost for repairs or replacements in the event of a disaster. This could include storm damage, fire, or even theft.
• A home warranty is more like an insurance policy for the machines and systems in a home that people rely on every day. This includes appliances such as a refrigerator or clothes dryer, and installed systems ranging from plumbing to pool filters. These are all essential parts of a home with complex designs and lots of parts that see plenty of use. It’s inevitable that over time they’ll wear down, needing maintenance or even replacement. A home warranty covers most of the cost of those repairs, maintenance calls, and new appliances or systems. If you like, you can consider it an independent extension of any manufacturer’s warranties you’d normally get.

Hail damage or a kitchen fire can quickly throw your life out of whack. However, a malfunctioning electrical system or broken toilet can be nearly as disruptive in their own way. Together, a home insurance policy and home warranty can provide protection against almost any disaster imaginable, large or small. This can provide great peace of mind and comfort to people knowing that they have help available for any emergency.

Like most forms of warranties and insurance, however, a home warranty isn’t necessarily a great buy for everyone. Here are a few things I always consider before recommending a home warranty to anyone:

The personal handiness level of the household: If you have enough maintenance-oriented people in your household or friends circle, your need for a home warranty is reduced. For instance, I feel comfortable in my ability to handle most appliance or plumbing breakdowns and maintenance myself, and I know some people I can count on if I have electric problems, so my personal need for a home warranty is low. If your expertise lies elsewhere, then a home warranty can be a good way to supplement your lack of handiness.

The age of your home and appliances: If you’re moving in to a new home (less than five years), then the risk of your HVAC system or plumbing failing is pretty low. New appliances are also typically reliable, and are often covered by a manufacturer’s warranty besides. On the other hand, the need for maintenance and risk of breakdown increase with age, so older homes and machines have more of a need of coverage.

Climate stress: Structures located in geographies with extreme climates tend to be at more risk for damage and wear and tear. Extreme heat, for example, puts a lot of strain on your air conditioner. Extreme cold can damage your pipes. Extreme humidity threatens electronics. Homeowners in these areas of extremes will usually get more utility out of a home warranty.
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Preexisting problems: Most home warranties to not cover preexisting problems with your systems and appliances. Getting coverage for a broken unit is usually not an efficient use of money.

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Your lifestyle and livelihood: Some peoples’ lives really simply cannot tolerate a failure of a vital home appliance or system or any long period of time. Perhaps it’s someone who makes a career out of baking out of their kitchen and needs their oven available all day, every day. Or a busy parent who doesn’t have time to work on keeping up on everyday maintenance. Or someone who depends on an electronic medical device that needs a constant and reliable source of power. If your life would be turned completely upside-down by losing an appliance or system for a few days, consider a home warranty for a quick, reassuring solution to most potential problems.

Home warranties can seem confusing at first, but a second look makes their potential value quickly apparent. A little research can help you determine whether they’re a good investment to consider. To learn more, consider contacting a home warranty company yourself and finding out what kind of service and pricing they can offer you.

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