Don’t end up wasting money on a warranty that doesn’t provide the expected protection.
- Some homeowners consider purchasing a warranty to protect their investment.
- These warranties can sometimes be costly.
- The coverage they provide may not be as comprehensive as you’d expect.
Homeownership comes with lots of expenses beyond your mortgage payment. If something goes wrong with the property, you’ll be responsible for paying for it — not your landlord. As a result of fears about repair expenses, some homeowners are interested in purchasing a warranty.
Home warranties aren’t to be confused with the warranties that builders provide when a new home is purchased, nor are they to be confused with homeowners insurance. They typically provide coverage, offered by a third-party warranty provider, that is supposed to cover many of the major systems in the home.
Unfortunately, they are often not worth the money you pay for them. Here are three big reasons why.
1. You may already have coverage without paying for it
Often, many of the items in a home come with a warranty from the manufacturer — especially the most expensive items.
For example, appliances usually come with at least a one-year guarantee. And if you pay for them with a credit card, then you may be able to get protection for longer if your card offers an extended warranty. HVAC components, such as a furnace, may even come with a warranty that lasts multiple years.
If you have a newer home and you already have a manufacturer warranty for most of the expensive items in your home, paying for additional coverage from a third-party provider wouldn’t make sense.
2. You may face high service or diagnostic fees
Many home warranty companies charge you a fee of $50 or more just to come out and check out whether you have a covered problem. This fee may be owed even if it turns out the warranty doesn’t provide coverage for the issue.
By the time you pay this service fee, you could end up with out-of-pocket expenses that are higher than you’d have paid an independent repair person. Or you could be out the money if it turns out you have no coverage at all and have to call a repair person anyway.