What is a home warranty?
A home warranty is a home protection plan that covers the cost of replacing or repairing almost any malfunctioning system or appliance in your home. Depending on how comprehensive the policy is, the cost of a home a warranty will typically range from about $200-$600 a year.
How does a home warranty work?
If your air conditioning unit breaks down, your dishwasher starts leaking, or your clothes dryer burns out, you call your home warranty provider and make a report. The warranty company will call a third-party contractor it has an arrangement with, and the contractor will get a hold of you to schedule an appointment. Someone will be sent to your house to repair or replace the broken appliance. The warranty provider will cover the costs of the repair or replacement, but you may be responsible for a co-pay that can range from $50-$125.
What does a warranty cover?
Each warranty company/provider is different, but typically these things are covered:
- Systems: air conditioning, heating, electrical, plumbing, water heater, garbage disposal
- Appliances: refrigerators, dishwashers, dryers, washers, range/oven/cooktop, built-in microwave oven, ice maker, trash compactor, garage door opener, built-in processors
Who should buy a home warranty?
A home warranty is a good idea for first-time home buyers since they may not have a lot of experience maintaining a home, and might have limited savings after purchasing a home. As with other financial decisions, you need to examine your needs to determine if a home warranty is right for your particular situation. But in general, you should consider buying a home warranty if:
- The home you’re purchasing is very old
- The systems and appliances in the home you’re purchasing are old
- Your savings has been depleted by your home purchase and you don’t have a lot left over to […]