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Could a Home Warranty Save You Money on Repairs?

By on July 24, 2017
Could a Home Warranty Save You Money on Repairs?

Owning a home is expensive, there’s no way around it. In addition to paying your mortgage and your home insurance, you also have to cover the cost of repairs. Unexpected repairs can cost you hundreds, even thousands, of dollars that you may not have – this is why many home owners purchase home warranties. Keep reading to learn what a home warranty is and whether it might save you money.

What is a Home Warranty?

A home warranty is similar to an insurance plan that protects your appliances and mechanical systems. Home warranties are generally meant to fill in the gaps that are left by your home insurance which typically only covers damage or loss due to theft or natural disasters.

A home warranty, on the other hand, protects you against unexpected breakdowns and normal wear and tear. For example, if your dishwasher were to stop working, your home warranty might cover the cost of repairs – your home insurance would do nothing.

Home warranties do have limitations, however, so be sure to read the contract before you pay anything to the company. You should also be aware that different companies offer different degrees of coverage, so choose the one that works best for you.

Does a Home Warranty Save You Money?

Before getting into the details of whether home warranties save you money or not, there are a few things you should know. Like any insurance-like service, you pay a premium for your home warranty. For the most part, home warranties are paid annually but many companies offer monthly payment plans as well.

In addition to your monthly or annual fee, you’ll also likely be charged a service fee – this fee applies each time you contact the company to send out a technician. This price varies from one plan to another but generally ranges from $30 to $75 – you pay it for every visit.

Now that you understand how a home warranty works, you may be wondering whether it is worth the cost. If you think about it, having a home warranty might save you money if one of the expensive appliances in your house breaks – a $1,000 refrigerator, for example.

You might pay a monthly premium of $55 as well as a $50 service fee, but the cost to repair or replace the fridge will be covered. For the most part, home warranties offer you peace of mind knowing that if something goes wrong, you’ll be covered. It is up to you to decide whether that peace of mind is worth the price of the warranty itself or if you’d rather take a gamble and hope that nothing breaks.

If you are purchasing a new home and it comes with a home warranty, there is no reason for you to refuse it. However, if you already own your own home, you might think twice before purchasing a home warranty. Home warranties are great for a number of reasons, but they aren’t always cost effective so you’ll need to think carefully about the options before you buy.

Frugal Village

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