Homeowners and buyers often wonder if home warranties are worth it. A home warranty is a service contract that covers the repair or replacement of major home systems and appliances that break down due to normal wear and tear. They can provide peace of mind and save money on unexpected expenses. However, not all home warranty companies are created equal. In this article, we will review the pros and cons of home warranties, the factors to consider before buying one, and the best home warranty companies in the market.
What Are the Pros of Home Warranties?
Home warranties have several benefits for homeowners and buyers, such as:
- Comprehensive coverage: Home warranties can cover up to 23 home systems and appliances that other companies may not cover or charge extra for. For example, some home warranties cover roof leak repair, septic systems, pools, spas, and guest units.
- Flexible plans: Home warranties allow customers to choose the plan that best suits their needs and budget. Customers can also customize their coverage with optional items that are not included in the standard plans. Customers can also choose their own service fee from $75 to $125 per service request.
- Reliable service: Home warranties have a large network of screened and licensed contractors who can provide quality service in a timely manner. Home warranties also offer a 30-day workmanship guarantee on all repairs and a cash payout option if the item cannot be repaired or replaced.
- Member perks: Home warranties offer discounts on new appliances and services such as pre-season HVAC maintenance, tech set-up and installation, and more.
What Are the Cons of Home Warranties?
Home warranties also have some drawbacks for homeowners and buyers, such as:
- Coverage limits: Home warranties have limits on how much they will pay for each covered item per contract term. For example, some home warranties will pay up to $3,000 per item for systems and up to $1,500 per item for appliances. If the repair or replacement exceeds these limits, customers will have to pay the difference out of pocket.
- Service fees: Home warranties charge a service fee for each service request made by customers. The service fee ranges from $75 to $125 depending on the customer’s choice. This means that if customers have multiple issues with different items at the same time, they will have to pay multiple service fees.
- Contract terms: Home warranties require a 12-month contract for their plans. If customers want to cancel their contract before the term ends, they may have to pay a cancellation fee of up to $50. Home warranties also reserve the right to increase the premium or change the coverage at the time of renewal.
What Factors Should You Consider Before Buying a Home Warranty?
Before buying a home warranty, customers should consider the following factors:
- The age and condition of your home: Older homes tend to have more frequent and costly repairs than newer homes. Therefore, a home warranty may be more beneficial for older homes than newer homes. However, customers should also check the condition of their home systems and appliances before buying a home warranty. Some home warranties may not cover items that are already in poor condition or have pre-existing defects.
- The cost and frequency of repairs: Customers should compare the cost and frequency of repairs for their home systems and appliances with the cost and benefits of a home warranty. Customers can use online calculators or estimates from contractors to get an idea of how much they would spend on repairs without a home warranty. Customers should also consider how often they would need repairs for their items. If customers rarely need repairs or can afford them easily, a home warranty may not be worth it for them.
- The coverage and exclusions of the plan: Customers should read the fine print of the home warranty contract carefully before signing it. Customers should understand what items are covered and what items are not covered by the plan. Customers should also check what conditions or situations would void the coverage or cause a claim denial. For example, some home warranties may not cover items that are improperly installed, maintained, or used.
- The reputation and reviews of the company: Customers should research the reputation and reviews of the home warranty company before buying a plan from them. Customers should look for factors such as customer satisfaction, complaint resolution, accreditation, ratings, awards, and testimonials from trusted sources. Customers should also avoid companies that have too many negative reviews, unresolved complaints, lawsuits, or scams.
What Are the Best Home Warranty Companies?
According to Forbes Home, NerdWallet, Investopedia, and other sources, some of the best home warranty companies in the market are:
- American Home Shield: American Home Shield is one of the oldest and largest home warranty companies in the U.S., with over 50 years of experience and more than 1.8 million customers. It has an A+ rating from the Better Business Bureau and a 4-star rating from Trustpilot. It offers three home warranty plans, one that covers major systems, one combination system and appliance plan, and one premium plan that covers 23 home systems and appliances. It also allows customers to customize their plan with additional coverage for items like pools, spas, septic pumps, well pumps, guest units, electronics, and more. It also allows customers to choose their own service fee from $75 to $125 per service request.
- Choice Home Warranty: Choice Home Warranty is another leading home warranty company in the U.S., with over 10 years of experience and more than 1 million customers. It has a B rating from the Better Business Bureau and a 4-star rating from Trustpilot. It offers two home warranty plans, one that covers basic systems and appliances, and one that covers total systems and appliances. It also offers optional coverage for items like pools, spas, septic systems, well pumps, sump pumps, central vacuums, and more. It charges a flat service fee of $85 per service request.
- AFC Home Club: AFC Home Club is a home warranty company that stands out for its flexible plans and benefits. It has an A+ rating from the Better Business Bureau and a 4-star rating from Trustpilot. It offers four home warranty plans, one that covers major systems, one that covers major systems and appliances, one that covers most systems and appliances, and one that covers all systems and appliances. It also offers optional coverage for items like pools, spas, septic systems, well pumps, sump pumps, ice makers, tankless water heaters, and more. It allows customers to choose their own service fee from $75 to $125 per service request. It also offers benefits such as free credit monitoring, emergency alert network, discounts on restaurants and retailers, and more
Home warranties are worth it for some homeowners and buyers who want to protect themselves from the high cost of unexpected repairs for their home systems and appliances. However, home warranties are not worth it for others who can afford repairs easily or have newer or well-maintained homes. Before buying a home warranty, customers should consider the age and condition of their home, the cost and frequency of repairs, the coverage and exclusions of the plan, and the reputation and reviews of the company. Customers should also compare different home warranty companies and plans to find the best one for their needs and budget.