Home Warranties: Are They Worth It?

Home Warranties: Are They Worth It?

This past week Mrs. ROB and I had a bit of a snafu with our central air conditioning. For whatever reason, initially, the condenser wasn’t working to cool air into the house. Considering that neither one of our HVAC experts, we called an HVAC guy who came out and stated there was an electrical short to fix and that was the problem. Luckily, he didn’t charge us anything for his time, but we then had to call an electrician who was able to fix the problem to the tune of $450, which is a lot better than the $2000 I was thinking it might cost if we have to replace our condenser.

Being the social media maven that I am (not in a million years I don’t even have a smart phone) I posted our trials and tribulations to Facebook. Several of my friends suggested getting a home warranty.

Now this is not the first time I have heard this. For a few hundred dollars a year you get the benefit of repairing and potentially replacing major appliances/equipment in our home. Sounds like a great deal right? And it might be. But for whatever reason I still haven’t pulled the trigger on getting one. So let’s take a look at some of the advantages and disadvantages of a home warranty.

What Is a Home Warranty?

A home warranty is NOT insurance, but it can cover repairs or replacements of some major appliances in the home (air conditioning, fridge, stove, washer/dryer, etc). All of the appliances should be in working order and all you have to pay is the co-pay on specific repairs. It might be $75 or $100 depending on the call/appliance.

Advantages of a Home Warranty

1) You can potentially save money. Home warranties can save a homeowner big bucks if your air conditioner goes out or your fridge or whatever. It perhaps could’ve saved us a couple hundred bucks.

2) Piece of mind. Some people like having the idea of a home warranty because it gives them a little extra insurance policy against things breaking. This can be particular useful if you are not DIY guy like myself.

3) It can be an added bonus if you are selling your house. By packaging a home warranty with the sale of the property you are giving an extra sweetener to that potential buyer.

DIsadvantages of a Home Warranty

1) You could end up spending thousands of dollars over the year and never replace anything. In other words, if you go ten year without a major repair in your home and you are shelling out $500 a year for a home warranty you could’ve used that money somewhere else and saved for repairs or whatever.

2) Read the fine print. Many home warranties won’t cover certain repairs if you have “pre-existing conditions.” In other words, if you bought the house, something hadn’t been maintained or whatever, they could find you at faulty and refuse to do the repair.

3) Age of the system. If something in your house is fairly old the warranty may or may not cover it depending on what you are buying.

4) You don’t get to choose the repair contractor. If you have a home warranty, the warranty company will send someone out to repair the item. They may or may not be the best repair person around. You don’t get to choose who is in your home.

5) Home warranty companies have a lousy reputation. Certainly, there are some good ones out there don’t get me wrong, but they are kind of like car salesman. They tell you they are giving you a great deal then when you actually buy the car you have nothing but a lemon. FIguring out if you have a lemon for a home warranty is difficult.

The Bottom Line

I am still undecided on a home warranty. When we bought our house I knew that the recommendation was to set aside 1% of the value of your home every year for repairs because things are going to break. Since we bought the house 9 months ago we have to replace our dryer and repair our air conditioner. Both have come to less than 1% of the home’s value, but I still wonder if a home warranty is a good idea. We have several appliances in our home that are multiple years old. The central a/c unit is probably going on about 8-10 years old. I am not sure that if we bought one these things would be covered.

This is one item I don’t have a definitive yes or no on. I guess I will just have to keep doing more research in the mean time. What do you think?

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