What is a Home Warranty?

A home warranty plan is a coverage plan that protects the systems and appliances in your home from the inevitable breakdown and inefficiency that comes from normal wear and tear or mechanical deficiency.

Without a home warranty plan, any time your air conditioning or how water system breaks down, or an appliance stops working, you will be on the hook for the entire cost of the repair or replacement. With a home warranty plan, you can have these costs covered with only a monthly premium and a small service fee.

How does Home Warranty benefit you?

When your essential home systems and appliances break down, repairs or replacement can be very expensive. Items such as your television, dishwasher and air conditioning unit will come with time-limited manufacturer’s warranty, but after this has expired, all costs are then on you.

A home warranty plan can cover all these major systems and appliances and ensure you will not be significantly out of pocket when these unexpected breakdowns occur. All these items will inevitably break down at some point due to normal wear and tear. So as long as you hold a home warranty plan, there will generally always be a time when you need to rely on it.

How much does Home Warranty cost?

There are two parts to the cost of a home warranty. The first is the monthly premium, which based on the provider, can also be paid as an annual premium with a discount. The market average for the monthly premium sits at around $40 per month.

The other cost involved in a home warranty plan is the service call out fee. This is payable for every claim made, and is generally paid out directly to the technician. The usual fee is around $125, with some providers offering a reduction in the service fee, but this will increase the monthly premium.

Home Warranty vs Home Insurance

Home warranty covers the internal operating systems and appliances that may – or will eventually – break down due to normal wear and tear. Replacement or repair can cost you thousands of dollars, so a home warranty coverage can help protect you against this.

Home insurance on the other hand protects your house, furniture and appliances from damage. So if for example a fire or flood damages your home, this is all covered under your insurance.

How to choose the right Home Warranty?

Every home warranty provider out there provides slightly different coverage. Being able to compare different providers can ensure you take up the coverage that will be the best for your situation.

The first consideration is what you are wanting to cover. Most providers have separate plans for appliances, systems, and a combination. Providers such as Americas First Choice and Liberty Home Guard are examples of this. Otherwise the providers will have plans which cover a mix of systems and appliances, to varying levels and inclusions. Choice and First Premier are examples of providers with this sort of coverage.

You will also need to consider how well your items have been maintained prior to the coverage. Most providers will not cover pre-existing conditions. If you do want to have coverage of the pre-existing conditions of your items, then a provider such as Cinch might be the best for you.

The next item to consider is the cost. This is both the monthly or annual premium, but also the coverage cap on each item. You do not want to find yourself in a situation where you are paying a cheap premium, but then are only covered for a small portion of a claim, and still find yourself thousands of dollars out of pocket.

You will also need to consider the duration of the workmanship guarantee that each providers offers. This can vary greatly, from not offering any guarantee, to as long as the lifetime duration of the coverage plan, Americas First Choice is one example of this.

Conclusion

For most homeowners, a home warranty plan is absolutely worth the money. The cost of repairing and replacing your essential home systems or appliances can quickly rack up, and it is completely unexpected when these items will break down.

For just a monthly premium and small service fee, you can save yourself thousands of dollars when the inevitable happens.

Each provider offers slightly different features in their coverage plans, so it is best to compare each provider to find out which one will best suit you.