Homebuying 101: Home Warranties

Nice to have a safety net.

A home warranty is a common part of a real estate transaction. The cost is around $600 per year and covers appliances, mechanicals and other components of a home. But if I already have homeowners insurance, why would I want a home warranty?

Because it can save you money, that's why.

Homeowners insurance usually has a pretty high deductible (bonus points if you know what yours is!) and generally helps with major damage. A home warranty has a much lower deductible (mine is around $100) and helps with the smaller components of a home that go kablooey, often at the most inconvenient times.

Perhaps some personal examples would help. For years when something would break in my home, the water heater, the garage door, other things I don't know how to fix, I would just go to a local vendor and get the appliance or feature repaired or replaced. It often cost me more money than I thought was reasonable, but I couldn't fix it on my own, so I relied on professionals, which is always a good move in my opinion.

Several years ago, after I spent a lot of money on a sewer line repair, I looked for a way to have a more budgeted approach to unexpected repairs. I decided to purchase the HSA Home Warranty that I often recommend to my real estate clients. It cost me around $600 for one year coverage (with the 7 Star Upgrade, which I call the expansion pack) and it has made a big difference in my out-of-pocket expenses.

It wasn't long into my first year with the warranty that my refrigerator stopped working; it was freezing everything in the fridge section. I placed a claim with the home warranty company, paid the service fee, and a vendor was scheduled to check out the fridge. The vendor began to troubleshoot, ordered parts, returned to install the parts and eventually after a rather lengthy time period, about a month actually, determined it couldn’t be repaired, so I was given a check for $1,200 to buy a new fridge. We picked out what we wanted and though it cost a little extra, still came out ahead.

A few months after that, the oven didn't seem to be holding temperature while we were cooking dinner. I filed a claim and the vendor diagnosed the problem, replaced the control panel, and we were back in business - "cooking with gas!" - as my Dad would say, though we do have an electric range.

Speaking of places that are not the kitchen, you know that feeling when you walk into your unfinished basement and see a water stain emanating from the water heater? It is not a good feeling. Especially when it is the Christmas season and your in-laws are visiting. Warranty to the rescue! The vendor was lugging a new water tank down the cellar steps to the basement the next day. In this case there were some code violations that the vendor needed to fix so I did have to pay an additional $200, but it was nice to know that it was done right this time. Side note, isn't it strange that a builder can install something brand new in 2010 and have it be a code violation in 2020? But I digress.

If a repair can’t be completed under the home warranty, you will likely end up with a new appliance of comparable value, whether it’s a water heater, stove, or heating unit, for example. Tip: Read the fine print to see what components of your home are covered and decide for yourself if a home warranty is right for you.

Over the last few years I have benefited from home warranty coverage with a new furnace, repairs to garage doors, washing machine, kitchen faucet, and both toilets. While facing down repairs is always stressful, I enjoy knowing I have a quick and easy way to get things fixed in my home.