Buy Peace of Mind with a Home Warranty

Even major appliance breakdowns are manageable when you have a home warranty that covers the cost of repairs.

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by NEA Member Benefits

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Key takeaways

  • For a few hundred dollars a year, a home warranty can cover fixes for your major appliances.
  • Electrical, plumbing and heating/cooling systems can be included too.
  • You buy yourself the “gift of time” as well, with a single point of contact for all repairs.
  • If you’re selling your house, a warranty could even help boost your sales price.

After the house itself, the best thing homeowners can buy is peace of mind.

That’s why so many opt for home warranties. Policies vary. But, in general, most cover electrical, plumbing and heating/cooling systems, in addition to appliances such as the washer/dryer, oven, range and garbage disposal, according to Realtor.com. But you can add to that list, as expanded plans can cover swimming pools, wells and spas.

Knowing you’re covered by a warranty can give you a great sense of comfort. “Imagine if you just moved in, and suddenly your air conditioning goes out on a hot summer day,” says Lisa Treu, founder of Delray Beach, Fla.-based Treu Group Real Estate. “You make one call and either they’ll fix it or replace it. This makes what could be a bad day all that much better. I’ve found it only takes one repair to cover the annual fee. It provides substantial relief in case of big-ticket surprises.”

As for that annual fee, plans typically range from just over $200 to nearly $1,500, according to HomeAdvisor.com. (The national average is just under $850.) In addition, you’ll be required to pay a deductible fee per service incident of about $100 or the cost of a repair, whichever is less, according to HomeWarrantyReviews.com.

If you happen to find a plan that is considerably less expensive than the rest, you should make sure it provides the same level of coverage as the others. “The extra $25 to $50 you save by going with a less expensive company can cost you several thousands of dollars,” says Daniel Montez, team leader of the Daniel Montez Real Estate Group in Gilbert, Ariz.

You’re best served by a warranty that comes with a “repair or replace” policy, meaning that if a system or appliance can’t be repaired, they automatically replace it. In addition, read the fine print to make sure the policy does not include an “obsolete parts” clause. “These shield the warranty company from covering a repair if the parts are hard to replace,” Montez says.

Three reasons why a warranty would work for you

1. You’re strapped for time and cash. As an educator, you may be too busy with classroom work, after-school activities and/or family responsibilities to deal with every household item that breaks down. With a warranty plan, you get a single contact for repairs, so you only make one call as opposed to constantly researching online for a service. At the same time, you take risk out of your budget, as the warranty serves as an assurance that any major repair expense is taken care of.

2. Your appliances are old. To factor the expected lifetime of your appliances, conduct an inventory of all eligible items. Identify the brand, model number, estimated age and any print and/or online material you can find to assess how long each is projected to last, and what it would cost to replace it.

Then, create a calendar so you can realistically predict what may break down and when—and how much you’d have to pay as a result. With this information, you’re in a better position to determine the value of a warranty, according to HomeZada, a website where homeowners can input this kind of data. Even if you end up not buying the warranty, it’s good to know about this for the purposes of homeowner’s insurance and resale.

3. You’re planning to sell your house. A warranty adds value, thus increasing your ability to find a buyer and, of course, enabling you to increase the sales price. And you’ll get coverage for the entire time your home is listed. “Depending on how long this takes, it can amount to 18 months of coverage for 12 months’ worth of cost,” says Damian Gerard, owner of St. Louis-based Gerard Realty Group. “It’s obviously a good deal, which is why we encourage sellers to purchase this.”

Two reasons you shouldn’t get a home warranty

1. You want to use your favorite repairman.  The warranty company typically determines which service provider will come to your home. Local service companies contract with the warranty company, and you’ll be told which contractor will provide the repair or replacement, i.e., if you have a “go to” repairman, you may not be able to use him.

2. You want to fix stuff that’s already broken. Home warranties operate like some health care polices, in that “pre-existing conditions” (in this case, broken appliances and systems) are not included. Items and systems must be in good working order to qualify.