Ask Andrew: Is Buying A Home Warranty Worth It?
By: Andrew Goodman
Q: Are home warranties worth purchasing?
A: I do believe home warranties are worth purchasing, for the right home. It all depends on the age of appliances, systems and other parts of the home to know if a warranty will be money well spent.
Let me explain what a home warranty is, what it covers and how it works. A home warranty is purchased to protect your home’s appliances and major systems when and if they fail. There are several home warranty companies out there with several different packages. American Home Shield (AHS) offers the following packages:
- Appliance Package ($19/month): Covers repair and replacement of most major home appliances including washers, dryers, icemakers and garage door openers.
- Combo Package ($44.08/month): Covers most major appliances and home systems including AC ductwork, electrical, plumbing, washers and dryers.
- Systems Package ($33.33/month) : Covers repair and replacement of most major home systems including A/C with ductwork, water heaters, plumbing and doorbells.
So how does it work? If an issue arises and you have the proper coverage, you would call the service line. A local repair professional would be scheduled to come visit your home. For each visit you would pay a predetermined service fee ($75-$125). If your issue is covered it will be repaired or replaced.
I feel that you can’t go wrong with having added protection. A home warranty is a simple and easy way to protect the items of your home if they break or fail. But the fees involved can get pricey. Everyone wants to save money and the question is if a home warranty will save you money.
If you have a newer home with new appliances and systems, I probably wouldn’t recommend purchasing a home warranty, as there may still be a manufacturer’s warranty on those items. There is also less risk that the equipment will fail.
If you’re in an older home, it may be worth the money.
Since warranty companies replace items that they can’t repair, it may be in your best interest to purchase a warranty if your appliances and systems are at their life expectancy. If the items can be fixed great, but if they can’t, they will replace them, which is even better.
Please keep in mind that you still have to pay a service fee for every call. So if they put a “Band-Aid” on an issue, you may be paying a few service fees until they deem your appliance or system to be replaced.
Please note, some sellers offer to purchase a home warranty for the buyer. The thought there is that the home warranty would solve some issues from the home inspection. If the seller has a warranty already in place, it could be transferrable to the buyer, depending on the type of warranty.
The idea behind a home warranty is to limit risk. If you have mid-aged appliances and systems, it’s truly a judgment call whether you would like to pay the money to be safe or take the risk and use the money that you would have spent for the home inspection to repair or replace the item(s) yourself.