Is a Home Warranty Really Worth It?

For the last 17+ years, I have been asked the question of….to buy a home warranty or not when purchasing a Re-Sale home.  To be able to answer this question, we have to lay some groundwork.

First off, what the heck is a Home Warranty?  A home warranty is typically a one-year service agreement that covers the repair or replacement of many major home system components and appliances that typically breakdown over time due to normal wear and tear.

This is NOT the same as an Insurance Policy – Unlike homeowner’s insurance, a Home Warranty is a service contract that covers essential applications and home system components when they break down due to normal wear and tear – items that most homeowners insurance plans do not cover.  Consider it the perfect complement to this standard insurance, not a substitute for it.

So what does it cover?  Well, this has been a constantly evolving animal.  In the “old days” it would cover any of your appliances, your A/C, plumbing, minor electrical and a whole host of other minor issues that come up with home ownership. Now-a-days, there is quite a bit more to what is covered and not covered and varies from one company to another.

The Good News:  Home warranties are great for people who may not have the cash to lay out all at once when something breaks.  Typically, there is a yearly fee and there a small service fee when you call in a repair through the Home Warranty Company.  As long as it is covered with your policy they will either fix the issue or if there is no solution or it cannot be repaired, they will replace the troubled component with a comparable product.

The Not So Good News:  Home Warranty Companies have gotten burned in year’s past and have much more detailed criteria for what they will cover or replace.  For example, a lot of them no longer cover Freon in your Air Conditioner.  It can be an argument (from personal experience) to have them cover something they feel is not covered under the warranty or they feel you broke.

The Bad News:  Home Warranty companies pay minimal payments to vendors and tradesman that do the repairs. The tradeoff is that they get lots of work.  Unfortunately over time though, the best repair companies abandon these Warranty Companies and you are left with the bottom of the barrel in quality serviceman.  Also, be prepared that your troubled appliance or A/C would probably have to burst into flames and be ashes before they will authorize a replacement.

 

If you think a Home Warranty is a good decision for you and your home, make sure you do your due diligence. Ask a licensed Real Estate Professional (Like Myself) who can guide you through the plusses and minuses. Happy Hunting!

 

Matthew W. Allen / Co-Founder-Broker Associate
Matta@RIFlorida.com / 321-228-5555

Realty International/The Allen Real Estate Team
102 W. 6th Ave., Windermere, Fl. 34786
www.TheAllenRealEstateTeam.com