A home warranty, also known as a residential service contract, is a service agreement that can help you save quite a bit of money. But that will only happen if you choose the right plan with proper coverage. Understanding what exactly this warranty can and cannot do will help you determine in which situations you should rely on it.
How Home Warranty Plans Can Save You Money
Home warranty plans are extremely versatile in their coverage. Therefore, they can offer many benefits depending on the situation. Do not mistake a home warranty for a homeowner’s insurance. While both of those aim to protect the homeowner from losing money, they cannot replace each other. Warranties cover the things that insurance plans do not. And it’s up to you to choose which things exactly you want to cover.
A home warranty saves you money by paying for repairs should they be needed. The benefit of this particular coverage is that it works not only for inbuilt faults or accidental breakdowns (like a manufacturer’s warranty). These plans cover wear and tear as well. Therefore, they give you a very good chance to save money when dealing with old household appliances.
The costs you can save with a home warranty plan include repairs and replacements of any appliances and mechanical systems included in your coverage. However, you will be the one paying the technician’s fee for inspection and analysis of the issue. The good news is that you won’t have to waste any time looking for qualified and reliable technicians as your warranty should include the list of authorized contractors.
Home warranty plans usually cover:
- HVAC systems
- Appliances (washers, driers, fridges, etc.)
- Contractor services
- Electrical wiring and infrastructure
- Ceiling fans
- Garbage disposals
- Central vacuums
- Pools, spas, bathtubs with motors, and Jacuzzis
When Should You Consider Getting a Home Warranty Plan?
Much like insurance, a home warranty is a preventative measure that protects you from potential losses. Therefore, you should always consider getting it as you can’t have ‘too much protection’.
However, if your budget is limited, you will need to consider the situation carefully. A home warranty is beneficial when the risk of breakdowns and subsequent repairs/replacements is real. This means that if your appliances and property as a whole are old, a warranty is a good choice. This is also the case when you use some appliances very often, thus pushing wear and tear.
How to Choose the Best Home Warranty Plan for You
- Consider your budget.
While it shouldn’t be the deciding factor, money should be taken into account when deciding on a home warranty. You need to set a budget to understand what you can afford. Then start researching your options as today you can get plans from $19.99. This means that even with a small budget, you can get the protection you need. The point is to choose the type of coverage that will work the best for your situation.
- Consider the wear and tear.
Will you be using your appliances often? How much wear and tear do they have already? Do some research to determine the lifespan of all appliances you consider covering with a warranty. You should also check the manufacturer’s exploitation tips and guides to determine how much your methods of exploitation affect these items.
- Consider your plans for replacements.
Do you plan on replacing the appliances soon? If yes, the new items will be covered by the manufacturer’s warranty. Please note that this doesn’t necessarily make a home warranty plan redundant. These plans cover a variety of systems and appliances, so unless you plan to have everything brand new, you might be able to find a plan that benefits you.
- Consider pre-existing issues.
You cannot use a home warranty to get a cheap replacement for a faulty appliance. This kind of cheating won’t work because the condition of the item will be taken into account when you sign the warranty. Any pre-existing problems will not only be noted, they might lead to warranty limitations. You’ll need to discuss these issues on a case-by-case basis with the provider.
- Consider your appliances.
When researching home warranty plans, you need to pay attention to details as quite often they might not cover some components of the systems/appliances that are covered in general. As those are usually the pieces that break down most often, such a warranty will be useless for you.
- Consider your insurance policy.
Talk to your insurance provider about the types of coverage included in the home warranty plan. These two types of protection must complement each other to provide maximum value for your money.
Requirements You Need to Meet When Getting a Home Warranty
The process of getting a home warranty is easy. You simply need to contact one of the licensed Residential Service Companies, choose the plan, and complete the necessary paperwork. You won’t need to organize a home inspection in order to get this service package, but everything covered by the warranty will be examined. It’s necessary because the warranty doesn’t cover any pre-existing issues.
There are no specific legal requirements for getting a home warranty, apart from being a US resident. You will also need to understand the terms and conditions of the document you sign. Take your time studying it and pay attention to the fine print to some nasty home warranty catches, which some real estate agents use. If you don’t understand something, seek counsel or at least research the wording using the Internet. Shady businesses often hide loopholes in contracts hiding them behind a wall of legal terms that an average person cannot understand.
Final Thoughts: Do You Need a Home Warranty Plan?
A home warranty plan can be a great money saver and it will definitely give you some peace of mind. However, like any protection, you might not benefit from it if nothing breaks down. Therefore, you need to evaluate your appliances and decide how reliable they are and whether additional protections are in order. Then, research the cost of repairs for the items that are most at risk and compare it to the cost of the warranty. Make the final decision based on your calculations.