A home warranty sounds like a good idea, but do you really know what it covers? Depending on your situation, it may not be necessary (and you can put that hard earned cash back into your newly purchased home).

Services

Many home warranties are over $300 a year, but services covered can be hazy. Home warranties may protect your appliances or installed features such as a swimming pool for a limited amount of time, but you can expect to pay a service call fee between $50-$100 any time you utilize your home warranty, even if repairs are covered. You may not be able to choose the brand of a replacement parts if the repairman sent from the warranty declares a specific item is needed, that’s what will be used. Should the repairman note that the appliance or another previously covered item under your warranty is faulty due to wear and tear or incorrect installation, your coverage may not be accepted.

New Appliances

If you’re buying a new home and it comes with new appliances, consider that most appliances come with a minimum, one-year warranty. It might be financially wise to opt out of a home warranty for the first year for this reason. Other considerations: Certain states require that a home builder include a warranty over the home’s structural soundness for the first 10 years after completion, in which case those repairs should also be covered in the original warranty — no extra coverage necessary. The bottom line: After you vet a home warranty company through an online resource like the Better Business Bureau, you can decide if the coverage included in a home warranty along with the warranties on your appliances are both necessary.

Older Homes

There’s usually some lengthy fine print when it comes to home warranties. If you’re purchasing an older home with a out-of-date air conditioner or septic pump, a home warranty often won’t cover repairs needed on those items. When you factor in the annual cost of the warranty, the service call fees and the possibility that major issues may not be covered at all, it might be worth saving that money and starting your own savings account and being proactive about repairs that may come up over the span of your homeownership.

 

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