Should You Buy a Home Warranty? How to Judge for Yourself

It is unfortunate that so many of us turn down the option of a home warranty when we first buy a new home. Why? Because it can be a way of offsetting enormous amounts of financial risk; after all, a warranty can help you replace a major appliance, a key household system, and even luxury items like a whirlpool tub!


Yet a lot of homeowners hesitate to buy this sort of coverage because they are not entirely certain about the value or importance of having it. In this article, we’ll look at a home warranty and how to decide if one is the right choice for you.

What is a Home Warranty?
First things first, and as one expert has written, “Home warranties aren’t insurance policies. Instead, they are service contracts. Like a service contract that covers repairs to your computer, a home warranty is a company’s agreement to pay for fixing — and, if necessary, replacing — specified home components.”
So, the warranty is never going to cover the replacement of something destroyed in a small home fire or lost in a burglary, but it will help you if the plumbing system has a significant issue, if the fridge dies unexpectedly and if the sump pump in the basement goes. You can even find more advanced options that cover your air conditioners, garage door openers and even enormously expensive things like septic systems.

Some Properties Have Them
Something to be aware of, though, is that many homes have existing coverage of this kind at the time they are sold. If you are a recent home buyer, take the time to find out if there was a warranty included in the sale. Though you’ll be responsible for any of the service fees that are a typical part of the home warranty, you won’t be responsible for a year’s policy costs.
Also, if you buy new appliances on a credit card, they usually have a warranty from the manufacturer. And, you should keep in mind that a newly built home may have a warranty, but may not need one. This is because new homes with new appliances and new systems should also have a year’s warranty and the major structural components of the house should have a ten-year warranty from the builder.

Is It a Good Idea for Your Home?
If your home is not newly purchased or built, it is a good idea to consider investing in one. This is because most older homes are likely to experience an issue with one or more of the most costly components. As an example, you have a home with a ten-year-old electric water heater, and the water on the property is hard or high in minerals. This means it is quite likely that a new one is going to be required in the near future. Your warranty will ask you to pay around $75 or less for the service fee, and then the rest of the repair can be covered.

Think of this for any and all of those expensive systems – heating, cooling, plumbing, electrical, appliances, and so on. The use of a home warranty from a trusted provider like American Home Shield can make the difference between enormous expenses and lots of savings.