Does Your Home Warranty Save Money?
There are few guarantees in life, but one thing for sure is that there will be times when you’ll have to expectedly spend money. Being prepared for these unforeseen events is vital. Otherwise, major events in your life can leave you in a difficult financial situation.
Consider your home. This is likely the biggest purchase you’ll ever make and is probably your most important long-term investment. You should do everything you can to safeguard it. Still, things inside your home will break down, requiring you to repair or replace them, so you can continue to enjoy home conveniences.
If something stops working during a timely period, you may not be in a position to cover the costs. The good news is a home warranty can eliminate much of this stress and prevent you from having to come up with a large sum of cash all at once. As you review how warranties work, you will see the financial benefits.
A Description of Home Warranties and How They Work
It’s crucial that you don’t confuse home warranties with homeowners insurance. The latter is required if you secure a mortgage loan. With it, you pay an annual premium (often paid directly from your mortgage) and receive protection against loss and damage from a disaster or catastrophe. It can cover damage from fires, lightning strikes, wind, hail, theft, or vandalism.
A home warranty covers everyday wear and tear on appliances and home systems. It pays for repairs to items that stop working but will not cover damage that these items may, in turn, damage. Your plan will also take effect if something stops working suddenly and without warning. With a warranty, you pay a monthly or annual fee, and the warranty company agrees to send a professional technician to your place to fix or replace the broken item.
Warranties typically cover your home appliances and systems for a year. You can renew it at any time, though continuous coverage is not necessary. The plan will apply to a wide range of household items, such as the dishwasher fridge, garbage disposal, oven, stove, built-in microwave, washer, dryer, and water heater. It will include your HVAC, electrical, and plumbing systems as well as the roof, sprinkling system, and even the swimming pool if you have one.
The Cost of Your Warranty
A home warranty can fit into just about any budget. Prices vary from plan to plan, but you can expect to pay anywhere from $300 to $700 a year with a warranty. When you make a claim and a technician comes to evaluate the issue, you will also have to pay a service call fee. This is ordinarily between $50 and $150.
The Cost to Repair Appliances and Systems
As you look at how much you’ll have to pay to fix items in your home, you can see how the financial responsibilities can skyrocket. Even replacing a small part of the dishwasher or fridge can cost $100. For more extensive repairs, you could be out a few hundred to several hundred dollars. If your heating and air conditioning go out, it could require a lot more to resolve the issues. Some homeowners can spend more than $1,000 to get this system back online.
The Cost to Replace Appliances or Systems
If something breaks down to the point where repairs can’t save it, the technician may determine that replacing it is the best solution. In this case, your costs would be even higher. A new dishwasher can be anything from $250 to $2,000. Good quality fridges can be worth $2,000 to $4,000 or more. Washers and dryers can easily set you back $1,000 or more.
If a system stops working, overhauling it and putting in a new one can be a huge financial blow. Taking out your plumbing system and starting over can be several thousand dollars or even in the $10,000 range.
See the Difference
As you assess your costs of having a home warranty and then look at what you would pay for repairs, it’s easy to see where you could save money. A single call for service can give you your money’s worth for your warranty plan. This protection can be especially beneficial if you are struggling financially. If you are living on a tight budget and have little to no savings, paying for appliances and system repairs could be impossible.
With the help of a home warranty, you can take care of these issues and continue to enjoy using your appliances and home systems. If you make multiple warranty claims, your cost savings will be even significantly higher.
Instead of gambling and hoping that nothing in your home breaks down, protect yourself and your finances. Purchase a home warranty plan today. It’s clear to see just how much you can save by having this protection.