Buying a home is already stressful enough—inspections, paperwork, mortgages—but then comes the cherry on top: deciding whether to get a home warranty. It’s that added peace of mind for new homeowners, but is it really worth the investment? Let’s break it down so you can decide whether a home warranty is your knight in shining armor or just an extra cost you could do without.
What is a Home Warranty?
First things first, a home warranty isn’t the same as homeowner’s insurance. While homeowner’s insurance covers damages caused by things like fires, storms, and theft, a home warranty is a service contract. This contract covers the repair or replacement of home systems and appliances that break down due to normal wear and tear—think your HVAC, plumbing, or the oven that decided to quit on you in the middle of Thanksgiving dinner.
What Does a Home Warranty Typically Cover?
A typical home warranty policy includes:
- Major home systems: Heating, air conditioning, electrical, and plumbing systems.
- Appliances: Things like the refrigerator, oven, washer, dryer, dishwasher, and built-in microwaves.
Some home warranty providers offer additional coverage for items like pools, spas, or even roof leaks. However, make sure to read the fine print! The devil is in the details—pre-existing conditions and certain high-cost repairs might not be covered.
How Much Does It Cost?
Home warranties typically cost between $300 and $600 per year, depending on the level of coverage. You’ll also pay a service fee whenever a technician is sent to your home, usually around $75 to $125 per visit.
If that sounds steep, consider the cost of replacing major systems or appliances out of pocket. For example, a new HVAC system can cost anywhere from $3,000 to $7,000. Suddenly, that $600 annual warranty doesn’t sound so bad, does it?
Is a Home Warranty Worth It for New Homebuyers?
New homeowners are often faced with unexpected expenses, and a home warranty can provide some financial predictability. Here’s when it makes sense:
- Buying an older home: If you’re buying a house that’s been around for a while, the appliances and systems might be nearing the end of their lifespan.
- Not a DIYer: If you’re not comfortable fixing things yourself or just don’t have the time, the convenience factor alone might make it worth it.
- No emergency fund: A home warranty can act as a financial safety net for those unexpected home repairs.
But if you’re buying a new build or a recently renovated home, the systems and appliances are probably covered by manufacturer’s warranties, making a home warranty less necessary.
Pros and Cons of a Home Warranty
Pros
- Peace of mind: Knowing that a big-ticket item is covered can relieve some of the stress of homeownership.
- Convenience: One call to your warranty company, and they’ll send a technician—no need to hunt down a repair person.
- Budgeting help: A fixed annual cost can help with long-term financial planning.
Cons
- Limited coverage: Not all repairs are covered, and pre-existing conditions or improper installations may not be included.
- Service fees: You’ll still pay out-of-pocket service fees, which can add up.
- Fine print: Many policies have limitations and exclusions, so you need to carefully review what is and isn’t covered.
How to Choose the Right Home Warranty
If you’re leaning toward getting a home warranty, it’s important to shop around. Here’s what to look for:
- Coverage options: Make sure the systems and appliances you’re most concerned about are covered.
- Contract details: Look for any exclusions or limitations that could be deal-breakers. Is there a dollar cap on repairs? Will the warranty provider replace appliances with similar quality models?
- Reputation: Research reviews and ask around for recommendations. You want a company that’s known for quick, reliable service, not a 30-day wait time to fix your air conditioner in the middle of summer.
- Service fees and deductibles: Compare not only the annual premium but also the service call fees to get a full picture of your costs.
When It Might Not Be Worth It
A home warranty might not make sense for everyone. For example:
- If you have savings: Homeowners with a well-funded emergency account may prefer to handle repairs as they arise, skipping the annual premium.
- If your appliances and systems are new: Manufacturer warranties often cover newer items, so paying for a home warranty may overlap with what’s already included.
The Verdict: Should You Get a Home Warranty?
Whether a home warranty is worth it depends on your personal situation, your home’s age, and your risk tolerance. For some, it’s the peace of mind that they’re covered for life’s little (and big) breakdowns. For others, it’s an unnecessary expense that doesn’t fit into their homeownership strategy.
If you’re the kind of homeowner who wants to mitigate financial surprises and isn’t a fan of DIY repairs, a home warranty can be a valuable tool. But if you’ve got a decent savings account, newer systems, and a knack for home maintenance, you might be better off rolling the dice and skipping the warranty.
My personal experience with home warranties, is that one summer, everything seemed to break at the same time. Two air conditioners, 2 water heaters, our dryer and our oven. If we had to pay full price of repairs and/or replacements we would have been in major trouble. Yes we saved many thousands of dollars, but the time it took to get things repaired or replaced was more then a month or two in some cases. It was still worth it, but be prepared…
