Important Hurricane Maria Update from our Headquarters

Should You Renew Your Home Warranty?

Joan PabonJul 23, 2017

If you’re new homeowner, it’s possible you already have a home warranty, whether it was included in your home’s purchase price or because you paid for it yourself. If your home warranty is about to expire, it’s time to decide whether renewing your contract is worth the cost.

Home warranties are policies designed to cover the maintenance and repair of appliances and major home systems, such as heating, cooling, and electrical. In theory, these plans should function as a security blanket for those worried about the potential expenses of having to repair or replace expensive and indispensable items in their home. If you have used you home warranty before, you already know how your warranty company operates and what to expect from them. If you have not, there are some considerations you may want to keep in mind before opting to renew.

How Old is Your Home?

First of all, consider the reason that drove you or the seller to purchase a home warranty in the first place. Is your home older or have you had to repair or replace major systems in the past? If that’s the case, a home warranty could pay out in the long run. The average cost of repairing an A/C unit, for example, could be lower than $300 or higher than $1,000, while replacing an entire system could cost you over $2,000. A home warranty, on the other hand, can cost between $350 and $550 a year, with some companies charging an additional fee ranging from $55 to $75 for each service call.

Think about your budget and decide of you would otherwise be able to cover the unforeseen costs of replacements or repairs. If you’re able to cover the cost one or more of your essentials, you may not need the additional protection of a home warranty. If your home is relatively new or has been recently remodeled, consider starting an emergency fund instead. By setting aside the same amount of money you would have spent on a policy each month, you could end up saving enough to cover future repairs without having to pay extra for insurance.

What Does the Home Warranty Cover?

Most home warranties cover all the major home systems, such as HVAC, plumbing, and appliances like refrigerators, dishwashers, ovens, washers, dryers, etc. Optional coverage may include protection for pools, in-ground spas, garages, well pumps, and septic systems, among others. Home warranty policies vary greatly in what they will and will not cover, and many home warranty companies set a limit on how much they will pay to replace certain items or on how many times you can request repair for them.

Also know that most home warranty companies, if not all, will refuse to cover any pre-existing defects or damages, meaning that if it was broken or not working before you purchased the warranty, the company will not pay to have it fixed. There may also be a number of other loopholes, for example, some companies will not cover damages made by animals, problems stemming from improper system installation, or any malfunction they conclude was caused by poor maintenance, so read the fine print and know exactly what and how much the warranty will cover before signing the contract.

Although home warranties and homeowners insurance are two very different products, some home insurance policies will cover the repair of major systems, leaking roofs, and even some appliances, depending on the cause of the system failure. Make sure you’re not purchasing coverage for something that’s already protected under your homeowners insurance or for items you don’t own.

What to Watch out For

Aside from service exclusions, watch out for deductibles or service fees, which can add up over time, especially if you end up requesting service for an appliance or system multiple times over the year. Some companies will aim to have problems fixed time and time again, opting for a short-term solution instead of replacing what doesn't work. Also, beware of home warranty companies that don't pre-screen subcontractors or don't guarantee the work they perform. It's imperative that the provider you choose guarantees customer satisfaction, even if they don't carry out the repairs themselves.

Before renewing your home warranty contract, consider everything from the items covered to the limit on what the company will pay out, as well as any restrictions on services and additional service fees. If you're not satisfied with your current coverage but want to invest in a plan that can help protect your savings in the event of an emergency, you may want to take a look at our top 8 home warranty companies and compare the plans they offer. Consider your options and shop around for a customizable coverage and a home warranty provider with excellent customer ratings, who will ensure the work done by third parties, and offer a large network of pre-screened contractors.