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Are Home Warranty Plans Worth the Monthly Fee?

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Posted at 3:26 PM, Aug 18, 2020
and last updated 2020-08-18 15:26:35-04

LANSING, Mich. — When buying a home, you could be offered a Michigan home warranty plan to purchase so that you can save money repairs or service. But is buying a home warranty a waste of money or will it keep you afloat when things go wrong? That is dependent on the type of contract you sign. If you accept the warranty without research, you might end up with one that offers less protection and costs a lot of money.

However, in some cases, a home warranty can save you substantially on expensive home repair services. But if your warranty doesn’t cover claims or you fail to need any home repairs within the warranty period, you will see it as a waste of money. Here are things to consider to determine if the home warranty is worth the cost.

What is a home warranty?

A home warranty is a service contract, not an insurance policy. It covers the replacement or repair of various appliances and systems in your home, such as air and heating conditioning systems, plumbing, and electrical. Your warranty most likely won’t cover doors, windows, and structural features, and it won’t protect your home from theft or fire. Still, you can find a home warranty that covers major home components. These warranty plans can also include significant appliances like swimming pools, refrigerators, dryers, washers.

Is a home warranty plan worth it?

The cost of home warranties range between $350 and $600 per year, and if you want superior coverage for such things as dryers and washers, septic and pool systems, you have to pay more. In addition to your annual premium, you are expected to pay service calls' fees between $50 and $125, depending on your contract terms.

Without a home warranty, you may spend hundreds to thousands of dollars replacing or repairing major systems or appliances.

Do you need a home warranty?

Homeowners purchase home warranties to get peace of mind. But if you sign the wrong contract, it can be a real mess and waste of money when you don’t have any expensive machines and systems to cover. So, before you decide on buying a home warranty, you need to determine if your home needs a warranty.

To determine whether or not your home needs a home warranty plan, you should check if the risks you want to protect are already covered by the manufacturers’ and builders’ warranties. Also, go through the inspection report to identify any grounds that can make go for a home warranty. Through that, you could find that you have covered already for your appliances and systems so that a home warranty won't be necessary.

Besides, almost all the appliances come with warranties that protect them for up to three years. But if you find that you aren't protected anywhere else, it would be best to look into a home warranty, especially if you find your appliances to be breaking often or you live in an old home.

How to choose the best home warranty

It will help if you read the terms of a home warranty plan before purchasing it to know what is included and excluded. Some plans may use a lot of industry jargon in the contract, so don’t hesitate to reach out to a representative to ask more questions if you don’t understand the terms.

Once you’ve read the contract, you’ll need to compare it to others to choose which plan may be best for you. Don’t forget to read reviews of home warranty companies as well, as they can give insight into things the company may not want to admit, such as hidden fees or slow response times.

How to research a home warranty company

You can spend a few minutes online to look for the warranty that is covering all you want. If the company you are interested in has a bad reputation, you can find another better company. That way, you will have saved your time and money. You can use online sites to search for home warranty by searching the company name. As mentioned above, look at the reviews and other information posted on third-party sites to obtain more information.

A home warranty can save you money, but this depends on the kind of repairs and replacements you will be needing. It will make you feel safer and comfortable with a home purchase, especially if it's an older home with already used HVAC units and other appliances. However, don't rush to buy a home warranty while purchasing a house; you have to check if it is worth your monthly payments. Home warranty plans aren’t a fit for every home, but if you do your research, you may find yourself with a good plan.

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