Home warranties cover major appliances and systems that are not protected by homeowners’ insurance. Unlike your homeowners’ coverage, home warranties are not insurance policies and you’re under no obligation to buy one.
But they can be a wise investment because, eventually, every major appliance and system in your house will need to be repaired or replaced — and those are big-ticket items that don’t come cheap.
Without a home warranty, you’re stuck footing the entire bill on your own and scrambling to find a decent contractor or service provider who can get to you quickly. That kind of rush usually comes with an emergency surcharge, which you’ll have no choice but to pay when you’re living without heat, hot water or a means to cook your food or keep it cold.
A Home Warranty Can Make Budgeting More Realistic
It’s a whole lot easier to make room in your budget for a two-digit monthly bill than it is to build thousands of dollars in emergency savings dedicated solely to home repair.
Home warranties cover critical systems like electric, plumbing, ductwork and heating, as well as major appliances like water heaters, ovens, ranges, cooktops, dishwashers, refrigerators, air conditioners and garbage disposals.
Given enough time, every single one of them will need to be repaired or replaced. Any one of them can cost well into the hundreds and several come with four-figure bills or higher. If any two go at the same time — not unheard of, considering appliances are often purchased together — you could be staring down a financial catastrophe.
It Can Make It Easier To Plan For Unexpected Expenses
If you invest in a home warranty, your policy will clearly outline the cost of service visits should something go wrong — typically, it’s between $75-$125. That’s a predictable and manageable expense you can plan, save and prepare for.
On the other hand, it’s much harder to anticipate expenses when you go without a home warranty. For example, HomeAdvisor says the cost to repair a refrigerator runs between $40-$1,000 — that’s quite a range — with most running between $300-$500 for an average of about $350.
That’s presuming it can be fixed. If it needs to be replaced, you’d better hope you can find a juicy Black Friday sale because you’ll be stuck paying every penny for your shiny new fridge.
You Can Customize Your Plan To Suit Your Needs
You can invest in a home warranty that’s tailor-made for your home and that focuses on the things you most want to protect. The systems and appliances mentioned above come standard with most plans, but you can choose whether or not to include many kinds of optional coverage. That might include something like an ice maker built into your freezer, a jetted bathtub, pool equipment or even a roof leak.
It Can Keep You Out of Debt
Without a home warranty, most families have just one option in the face of a high-cost emergency that must be dealt with right away — their credit cards.
Most households don’t have sufficient savings to cover major unexpected expenses, and if you don’t have the cash to pay the contractor’s bill today, then you probably won’t have the cash to pay your credit card statement balance in full next month. That will lead to finance charges and an ever-growing revolving debt that gets harder to keep up with every month.
That can all be avoided with an investment in a good home warranty.
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