Do You Need a Home Warranty?
Do you need a home warranty? If you’re a first-time homeowner, you might. But there are reasons why other homeowners should consider a home warranty, too. Here’s what you need to know.
What is a home warranty?
A home warranty covers the costs of repairing or replacing most malfunctioning systems in your home. Policies typically cost $300 to $900 a year.
If you had a home warranty, you wouldn’t need to get estimates for repairs when a problem occurs. You wouldn’t have to pay out-of-pocket to fix the problem or have equipment replaced, either.
Instead, you’d call your home warranty provider or submit a ticket online. The warranty company would call the appropriate tradespeople with whom it has made arrangements. The company sends someone to fix the problem, if possible, or replace the malfunctioning appliance with a brand new one. Your home warranty premium will cover the costs, though you’d probably be responsible for a co-pay (roughly $50 per incident).
Do you need a home warranty?
Home warranties are ideal for first-time Gen X/Y and Millennial home buyers who’ve been renters until now. They’re used to calling the landlord whenever there’s a problem, and a home warranty company essentially takes over that role.
These homeowners often work long hours and might not have the time or energy to find a plumber or an electrician to get quotes or bids, let alone wait through the noon-to-4 p.m. window for the repair person to show up.
But home warranties aren’t limited to young or other first-time home buyers.
If you had your home inspected, you’ll know the condition and life expectancy of many of your systems. If some systems are on the outs, you’ll welcome the home warranty. Many appliances and systems start to break down after 15 or 20 years and you don’t want to deal with multiple systems falling apart at the same time.
Real estate agents often purchase a home warranty for their clients as a closing gift. If not, you can buy one on your own. Any owners of any age home can purchase a home warranty at any time. Be sure to shop around to compare premiums and coverage. The older the home, the more coverage you should buy.
Home warranties are also great for investors or “accidental landlords” who don’t necessarily want to be in the business of fielding repair calls from tenants. If you’re not an experienced real estate investor and don’t have a network of repair professionals, it might be easier to pay for the home warranty.