Even though homeowners are not required to obtain a home warranty, many financial advisors recommend they do. In many instances, new property owners use most of their savings to purchase a home, which means unexpected repairs often cause financial issues. A home warranty offers a way to avoid paying out of pocket for many home repairs.
When Should Homeowners Consider a Home Warranty?
Builders provide a warranty when a new home sells, and manufacturers’ warranties protect specific home appliances. However, builders’ warranties are often limited to as little as one year, meaning property owners can expect to pay for many repairs afterward. Existing homes don’t have warranties, and many industry experts recommend home warranties to protect buyers from unexpected expenses and provide peace of mind.
The older a home is, the more critical it is to look at home warranty plans. Older systems typically suffer system failures more than newer ones, and that’s normal. Buyers are encouraged to evaluate the condition of a home’s various systems to determine if a home warranty would provide value. Remember that home appliances and systems all have limited life expectancies. While replacing a single appliance may not be catastrophic to a homeowner’s budget, the failure of multiple items could lead to financial distress. That’s when having a home warranty is especially important.
How Much Does a Home Warranty Cost?
Home warranty costs will vary depending on the type of plan selected and any added coverages. A basic plan can cost less than $300 annually, but the costs rise significantly as additional systems are added. Additional coverage can push a plan’s cost to over $1,000 annually, but that figure is minimal if a covered system fails.
Consider the age and condition of all covered components when evaluating the value of a home warranty. For example, a new home is unlikely to need significant coverage, but older properties are subject to costly failures, so having a home warranty could prove invaluable.
What Systems Are Covered?
Homeowners have several options when choosing coverage levels. Basic coverage generally protects specific kitchen appliances. Other available plans cover more appliances, heating and cooling systems, plumbing components, and electrical systems. Additional coverage for roof leaks, home septic systems, pools, and spa equipment are available.
Top home warranty providers offer customized plans to handle most clients’ needs, so take the time to review the standard options to see what is covered to determine if additional coverage options are necessary.
Start With a Home Inspection
All home buyers are encouraged to obtain a home inspection before purchasing a home. Home inspections provide an excellent picture of a home’s condition and allow would-be buyers to evaluate the need for a home warranty. In many cases, sellers provide coverage for the first year of a new buyer’s ownership, but that coverage may not cover all systems. Buyers looking for additional peace of mind can contact the warranty provider to request additional coverage if they feel the extra protection is warranted.
Review the Fine Print and Ask Questions
Before purchasing a home warranty, review what is covered. If specific items are not included in a basic plan, explore the options for adding coverage to provide the desired level of protection. When questions about coverage arise, contact the provider to ask questions and clarify any information provided.