When you buy a home, it can be comforting to know you have somewhere to call if the air conditioner, water heater, or dishwasher stops working. That is the appeal of a home warranty. But whether it is worth the money depends on the contract, the condition of the home, and how much you would pay out of pocket when something breaks.
A home warranty is usually a service contract that helps pay for certain repairs or replacements. Coverage varies by plan. It is separate from homeowners insurance and from a builder’s warranty on a newly constructed home. Consumer Advice
When it may be worthwhile
A home warranty may appeal to a buyer purchasing an older home with aging appliances or systems, especially if an unexpected repair would strain their budget. It can also offer some peace of mind during the first year of ownership. If the seller is paying for the plan, it may be easier to try it and decide later whether renewal is worthwhile.
Where buyers get frustrated
The word covered does not always mean the entire repair bill is paid. Plans can have service fees, dollar limits, exclusions, and rules about how to request a repair. The Federal Trade Commission recommends checking those details, along with the company’s reputation and how long claims take to resolve. Consumer Advice
Before buying, ask:
- What is the annual price, and what is the fee for each service visit?
- Which parts of the HVAC, plumbing, electrical, and appliances are covered?
- What are the payout limits and exclusions?
- Can I choose my own contractor, especially for an urgent repair?
- How does the company decide whether to repair, replace, or offer a payment?
Read the sample contract before paying for a plan. Then compare its total cost with putting that same money into a home repair fund. A home warranty can be helpful when the coverage matches your home and a company handles claims well. It is less valuable if the items you are most concerned about have limited coverage.
Are home warranties worth the money?
Sometimes. Do your homework on the specific plan before deciding whether it earns a place in your budget.
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