By Peter Fabris
The pitch for home warranties that cover major home systems and appliances is enticing. For a few hundred dollars a year, these policies promise to pay for repairs or replacement of home heating and cooling systems, refrigerators, dishwashers, and other big ticket items. Is it time to replace your appliances? Find out here.
Home warranty advantages
When something breaks, the warranty reduces a homeowner’s out-of-pocket expenses —assuming the failures are covered by the warranty. With a home warranty, you probably won’t have to shell out thousands of dollars if your central air conditioner fizzles out during a heat wave.
Home warranties also purportedly reduce the hassle of having to find a qualified contractor or repair person when something goes wrong. Some homeowners like the fact that they can get repairs done on major systems and appliances simply by calling a hotline or sending an e-mail.
Home warranty disadvantages
These warranties don’t always live up to expectations, though. The fine print in many warranties exempts items with “pre-existing conditions” and systems that haven’t had proper maintenance. Most warranties include deductibles that the homeowner must pay in addition to the annual premium, which can run in the $300 to $600 range.
When you report an incident, the warranty company will send a contractor to your home. The contractor checks if the problem is caused by lack of maintenance or care. If so, repair work may not be authorized by the warranty company. Other exclusions might include the age of a system — if say, a heating system, is more than 15 or 20 years old, some plans might exclude them from the warranty.
“You need to be really careful to read what’s covered and what’s not covered,” says Tom Kraeutler, host of the nationally syndicated radio show, The Money Pit. “You want to know what you’re buying and not assume that you have some kind of global protection that may not exist.”
Bottom line
Kraeutler does not recommend home warranties to most homeowners. For newer homes with systems and appliances that are not likely to break down, they make little sense, he says. Most homeowners of older homes probably won’t get their full money’s worth either, particularly after considering the deductibles and potential exclusions, he says.
For those who do opt for a home warranty, Kraeutler advises that the owner save all receipts for routine maintenance, such as annual home heating tune-ups, as proof of recommended maintenance requirements. Also, save the home inspection report after you buy a home. “The inspection might show that the air conditioning on the day of inspection had air going in at 78 degrees and coming out at 58, and it couldn’t do that unless the compression was working properly,” Kraeutler says. That’s strong proof that there was no pre-existing condition.
Warranties can be incentives for buyers
A home warranty might be most beneficial just before you put your house on the market. A warranty can be attractive to a buyer because it is transferable to a new owner. “It’s a way of offering some peace of mind to a buyer to show that systems are covered,” Kraeutler says. During a tough buyers’ market, a home warranty might provide an edge in getting your property sold.
Do you have the top tools for your home? Find out here.
Home Warranty Pros and Cons
By Peter Fabris
The pitch for home warranties that cover major home systems and appliances is enticing. For a few hundred dollars a year, these policies promise to pay for repairs or replacement of home heating and cooling systems, refrigerators, dishwashers, and other big ticket items. Is it time to replace your appliances? Find out here.
Home warranty advantages
When something breaks, the warranty reduces a homeowner’s out-of-pocket expenses —assuming the failures are covered by the warranty. With a home warranty, you probably won’t have to shell out thousands of dollars if your central air conditioner fizzles out during a heat wave.
Home warranties also purportedly reduce the hassle of having to find a qualified contractor or repair person when something goes wrong. Some homeowners like the fact that they can get repairs done on major systems and appliances simply by calling a hotline or sending an e-mail.
Home warranty disadvantages
These warranties don’t always live up to expectations, though. The fine print in many warranties exempts items with “pre-existing conditions” and systems that haven’t had proper maintenance. Most warranties include deductibles that the homeowner must pay in addition to the annual premium, which can run in the $300 to $600 range.
When you report an incident, the warranty company will send a contractor to your home. The contractor checks if the problem is caused by lack of maintenance or care. If so, repair work may not be authorized by the warranty company. Other exclusions might include the age of a system — if say, a heating system, is more than 15 or 20 years old, some plans might exclude them from the warranty.
“You need to be really careful to read what’s covered and what’s not covered,” says Tom Kraeutler, host of the nationally syndicated radio show, The Money Pit. “You want to know what you’re buying and not assume that you have some kind of global protection that may not exist.”
Bottom line
Kraeutler does not recommend home warranties to most homeowners. For newer homes with systems and appliances that are not likely to break down, they make little sense, he says. Most homeowners of older homes probably won’t get their full money’s worth either, particularly after considering the deductibles and potential exclusions, he says.
For those who do opt for a home warranty, Kraeutler advises that the owner save all receipts for routine maintenance, such as annual home heating tune-ups, as proof of recommended maintenance requirements. Also, save the home inspection report after you buy a home. “The inspection might show that the air conditioning on the day of inspection had air going in at 78 degrees and coming out at 58, and it couldn’t do that unless the compression was working properly,” Kraeutler says. That’s strong proof that there was no pre-existing condition.
Warranties can be incentives for buyers
A home warranty might be most beneficial just before you put your house on the market. A warranty can be attractive to a buyer because it is transferable to a new owner. “It’s a way of offering some peace of mind to a buyer to show that systems are covered,” Kraeutler says. During a tough buyers’ market, a home warranty might provide an edge in getting your property sold.
Do you have the top tools for your home? Find out here.