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Being a new homeowner is one of the most fulfilling things in life. But, imagine weeks after moving into your home, the refrigerator or the air conditioning stops working. Even worse, it’s pretty expensive to fix or replace.
Buying and maintaining a home can be extremely stressful, and looking for ways to lower the risk of tapping into your savings is understandable. Along with homeowners insurance, you’ve probably heard of a home warranty.
If you’re considering getting a home warranty, it’s important to know the positives and negatives of one and whether it’s worth it. Here’s an overview of what a home warranty is, how much it costs, what it covers and whether you should get one.
What Is a Home Warranty?
A home warranty is a service contract that covers the cost of repairs or replacement of major appliances and home systems that break down over time. The contract is between the homeowner and the warranty company.
Unlike homeowners insurance that covers major perils like fires, water damage or theft, a home warranty essentially covers the major appliances used daily in your home.
If any of your covered appliances break down due to wear and tear, the warranty company will repair or replace them for a discounted cost or at no cost at all. Contract terms and coverage vary based on the home warranty company you choose. It’s, therefore, crucial to read the warranty contract closely to ensure that you understand what’s covered, your limits and what’s excluded.
Home warranty costs vary based on the warranty company and several other factors, such as the plan you choose and your home’s location and property type — condo, townhouse, duplex or single detached. Generally, the more items you want to be covered in your home warranty, the pricier it will be.
How Much Does a Home Warranty Cost?
In addition to the annual premium, the warranty company will charge you a service fee. This is the fee you’ll pay each time you request a service provider to come to your house. The fee can be anywhere between $75 and $125.
It’s important to note that having a home warranty doesn’t mean you’ll never spend a penny on home repairs. The warranty won’t cover some items, either because you didn’t choose to include them in the contract or the warranty company doesn’t offer coverage for them at all. Also, if the cost of repairs exceeds the contract limit, you’ll need to cover the excess.
What Does a Home Warranty Cover?
A home warranty covers …….