Are Home Warranties a Good Investment?

A home warranty is similar to other warranties that you can purchase on something you buy.  However, a home warranty covers a variety of potential issues in a home. 

Most home warranties are good for 1-year and include some deductible ($50-$75) for a service call.  If the serviceman can’t fix the problem, then the warranty will cover replacement of that item.  Policies can be renewed every year if desired.

Coverage varies depending upon what level of coverage you purchase.  A basic home warranty will likely include repair or replacement of:

› HVAC systems

› Ductwork

› Plumbing

› Whirlpool, motor and pump

› Plumbing stoppages

› Water heaters

› Electrical

› Exhaust/Vent/Attic fans

› Built-in microwave ovens

› Dishwashers

› Ranges/Ovens/Cooktops

› Garbage disposals

› Trash compactors

› Rust/Corrosion/Improperly maintained equipment

A higher level of coverage will include items such as:

› Ceiling fans

› Garage door openers

› Telephone wiring

› Doorbells

› Central vacuums

› Smoke detectors

› Improperly installed equipment

Individual riders can be purchased for:

› Washers, dryers

› Refrigerators, freezers, ice makers

› Swimming pools/spa equipment

› Water softeners

› Well pumps

› Septic system equipment 

Home warranties can run between $400-500 for a basic policy and up to $1,000 for a premium policy with multiple riders.

So should you buy a home warranty?

It really is an individual decision.  Some people swear by warranties and others scoff at them.  There are a few universal truths about any type of warranty or insurance policy:

 1)  The likelihood of needing to use a warranty is small but if you have a problem and the warranty covers it, then you will be glad you had it.

 2)  There is always fine print associated with warranties.  Be sure you thoroughly understand the benefits, deductibles, and exclusions applicable to the coverage you sign up for.

 3)  Warranties may require you to use specific repairmen.  You may not get to choose who does the work.

 4)  When replacement is necessary, generally a warranty company is only going to replace with similar, “in kind” replacements.

If you are not especially handy or the systems within a house are at or near their life expectancy, then a warranty may provide valuable peace of mind.

The Scott Loper Team includes Scott & Lisa Loper, Keller Williams Real Estate, 601 Bethlehem Pike, Bldg B, Ste 100, Montgomeryville, PA 18936, (215) 631-1900.