Are home warranties worth it?
Are home warranties worth it? If you’re a homeowner unsure about what home warranties cover or whether home warranties are even worth it, this is an important post to read. Unlike homeowners insurance, mortgages don’t require a home warranty, so getting one typically isn't on the must-do list when purchasing a home or reviewing your insurance coverage. However, going without a home warranty can be an expensive gamble because home insurance doesn't cover the same things. If you’re unsure what a home warranty covers or how it differs from an insurance policy, it’s tough to decide whether it’s worth the extra cost. But going without its protection can prove to be a costly mistake.
Is it worth buying a home warranty?
If you own a home, you have probably asked yourself whether a home warranty is worth it. You also may wonder which kind of home warranty makes the most sense for you and your home. Most often, we think of home warranties as something for newly purchased homes or if you live in an older home, and that’s true. However, home warranties also protect people who want to limit out-of-pocket costs, plan to put their home on the market soon and attract homebuyers, or don’t want to spend the time tracking down the right repair person.
Home warranty companies are all different and offer varying warranty structures and benefits. Responsible homeowners need to consider more than just direct costs when making the best decisions for their budget and homes.
What is the main purpose of a home warranty?
Home warranties are annual service contracts. When you sign up for one, the warranty will help cover the repair or replacement of major appliances, such as washing machines, refrigerators and dishwashers. Depending on which option you choose, a home warranty can also cover systems like plumbing and HVAC systems. If you don’t have a home warranty, you’ll pay out of pocket for anything that goes wrong in your home, and that lack of coverage will cost you.
Do home warranties cover things already broken?
Not all home warranty companies do, but Cinch covers unknown pre-existing conditions that you might find after moving in and offers helpful discounts on purchasing new appliances. Similar to homeowners insurance, home warranties typically require a monthly or annual payment along with a deductible at the time of service.
However, it’s important to note that home warranties are not the same as homeowners insurance. Mortgage lenders typically require homeowners insurance before they issue a mortgage policy, and it generally covers personal property, the interior and exterior of the home, and general liability insurance. Home warranty coverage is optional and generally applies to the systems and major appliances you rely on throughout your home to keep it running smoothly and comfortably.
What does a home warranty cover that homeowners insurance does not?
Unlike homeowners insurance, warranty coverage isn't required by your bank when you get a mortgage, so it might get skipped on the must-do list for first-time homebuyers or overlooked on the annual once-over you give your insurance coverage. Consequently, many homeowners don’t realize they have glaring gaps in their home’s coverage.
A homeowners insurance policy covers major damage, theft, loss or liability associated with your home. But a home warranty covers situations your insurance doesn’t — the cost of repairing or replacing your major appliances and home systems. Home warranty coverage comes to the rescue if anything — from your built-in microwave to your plumbing — gives you problems due to everyday wear and tear or sudden malfunction. While an insurance policy has your back for major disasters, it won’t cover these day-to-day mishaps.
How much will a home warranty save you on household repairs and replacements?
Major appliance repair could cost you thousands, but a warranty plan from Cinch Home Services can cost as little as $35 per month. While costs vary based on where you live and the coverage you need, the potential expense of replacing one of the major appliances your family relies on daily far outweighs the monthly payments on an annual warranty plan.
With home warranty coverage, when something goes wrong with a covered item, you only need to pay a one-time service fee to the service provider instead of absorbing the entire repair cost. Plus, the warranty company connects you to a qualified contractor when you make a claim, so you don’t need to worry about overpaying for repair or getting shoddy service.
On top of offsetting upfront repair costs, a warranty plan also injects predictability into your home maintenance costs. It makes sense to put money aside every month to save for either regular or unexpected home repairs, and a warranty service contract is one way to ensure you allocate some of your budget to home maintenance every month.
Real estate agent Mark Strickland says that if you don’t keep up with regular maintenance on your home, it “could easily lose 10% of its appraised value.” Even newly built homes, which sometimes come with builder home warranties (that don’t usually cover appliances), can require unexpected repairs soon after moving in. Investing in a home warranty plan saves you money on the upfront repair costs of your home’s systems and appliances and can make you money when it’s time for you to sell your home.
Repair costs vs. warranty costs
One of the first things to consider with a home warranty is the cost of the warranty versus the cost to repair or replace items in your home without a warranty. It might help to list everything you depend on in your home, like major kitchen appliances, water heaters and plumbing systems. In addition to their age, keep track of their condition, normal wear and tear, and any existing manufacturer warranties or extended warranties that apply.
From there, you can determine how likely you think each item will require repair at some point and the urgency to repair it. For example, you might be able to live without a dishwasher for a bit, but could you live without your furnace in the middle of winter or air conditioning in the middle of summer? Then compare the cost of a warranty versus the cost of replacing something outright and the service fee involved. Repair costs can be expensive, but you can often save yourself money over the long term with the right warranty.
Home repair cost examples
When you start putting your list together, you want to know the average prices to repair or replace major appliances and systems in your home. There are a few websites that can help with this. Still, we’ve listed some typical repair costs for big-ticket items below:
- Air Conditioner: $3,800-$7,500
- Water Heater: $811-$1,567 (more for tankless or solar)
- Garbage Disposal: $70-$400
- Washing Machine: $445-$2,300
Why getting a home warranty is particularly worthwhile when buying a home
Maintenance is one of the hidden costs of owning a home. First-time buyers are often surprised by the extra expenses that sneak up after closing. Besides adding stress to your life, unexpected maintenance issues can seriously gouge your pocketbook.
Since home inspections don’t usually include an assessment of appliances, you might feel like you’re making a blind bet on the condition and life span of the appliances when you move into your new home. That’s why it’s best not to wait until you’ve settled in or had your first big maintenance scare to get a quote from a warranty company. Wrapping a service contract into your house closing so you have coverage from the minute you take ownership is a great idea.
What are the cons of a home warranty?
The truth is that when it comes to deciding whether to purchase a home warranty or not, there are very few cons to consider. It’s possible that if you’re lucky enough to have filled your home with high-quality systems and appliances that are relatively new, still under manufacturer warranties and built to last, you could manage to go months or even a few years without needing to service or replace something essential. In this case, you could avoid the monthly or annual cost of a home warranty. Then again, when you inevitably do need to service or replace a system or appliance, you will face the entire expense on your own.
Dangers of not getting a home warranty
Without warranty coverage, you might try to avoid maintenance costs or repair when they pose a real challenge to your budget. But appliances like your fridge and home systems like your HVAC are the kinds of repairs that cannot wait. You need them up and running right away.
For example, if you live in a flood zone and your sump pump goes down, you can’t leave it to chance that you’ll have extra money on hand to repair it. You may be unlikely to try and tackle maintenance or repair needs yourself on complex systems, like your air conditioner or plumbing, or essential appliances, like washers and dryers. Without a warranty, you risk major upfront costs and the hassle of finding reputable and affordable service providers. Supplementing your standard insurance with a home warranty plan removes the guesswork and financial pressure from maintaining your appliances and home systems.
Why a home warranty is worth it: Lorraine's $12,000 budget hit
Lorraine chose not to get a home warranty when she bought her house. The home inspection revealed that her boiler was on its last legs, but at the time, she didn't want to pay the $500 for home warranty coverage on her home systems and appliances. She didn’t think a home warranty was worth it.
Unfortunately, less than a week after the deal closed on the home, her boiler burst into flames and had to be completely replaced. She had to pay the entire $12,000 replacement bill out of pocket. Lorraine is now a real estate agent, and she advises many of her clients to purchase a home warranty policy. "When a buyer is buying a home, you have to keep in mind that these are used items," she says. "You never know, because the last thing you want to do is spend big money on big-ticket items."
So, is a home warranty really worth it?
For most people, a home warranty is worth it. Unless you’re a highly skilled repair technician, you’ll need to hire out for a repair or replacement at some point. Besides the cost-saving benefit, you also need to consider the peace of mind that comes with a home warranty and the time it will save you over the long run.
Peace of mind and serious savings
The last thing you want to do is come home to a broken water heater on a cold night or realize your dishwasher no longer functions during a holiday party. When this happens, a home warranty can provide peace of mind that someone is there to help — fast. Instead of hunting down a repair service, a home warranty allows you to make a service call quickly and easily at any time of the day. A home warranty can save you money on large, unexpected repair bills. The right plan will include consistent monthly or annual payments. It will act as a buffer and prevent you from taking money out of an emergency fund or pushing a credit card limit for covered items.
Know you’ll always have a trusted technician and consolidated repair history
When something breaks, having a home warranty can save you time vetting the right repair company or technician. A home warranty company does the work for you, so you don’t have to worry about who’s coming into your home. With a Cinch home warranty, when you make a service request, we’ll match it with one of our thousands of network professionals. We’ll also provide you with the tools you need to keep your repair history in one place. With our platform, you can log into your account anytime to find all the information you need right at your fingertips.
Protect yourself with an affordable home warranty plan
Whether you’re purchasing a home or have been in your current home for a while, you should consider a Cinch home warranty plan, which could limit your out-of-pocket expenses to as little as $100 per covered repair. If we can't repair your appliance, we'll replace it, and we guarantee every covered repair for 180 days. You never know when something in your home will stop working. A warranty from Cinch can give you the peace of mind that comes from knowing that you'll be covered when you need a repair.
Discover your perfect home warranty with Cinch
We guarantee a Cinch home warranty is worth it. Discover the Cinch difference and shop our protection plans today. Whether you’re purchasing your first home or are a longtime homeowner, it just makes good financial sense to consider a home warranty plan in addition to your insurance policy. Here are some key reasons why a warranty plan is worth it for homeowners:
- Home warranty plans cover situations that insurance doesn’t.
- Investing a few hundred dollars in a warranty can save you thousands in upfront repair costs for appliances.
- A warranty company sends a vetted, licensed repair contractor to your home as soon as you file a claim, saving you the time and stress of arranging one yourself.
- A home warranty plan offers peace of mind that your home is covered no matter what unexpected repair or maintenance issue crops up.
Millions of Americans have already saved money, time and headaches by investing in a home warranty plan from a trusted name like Cinch.
Affordable home warranty coverage options
Companies often divide home warranties into different coverage options. The right option can make a warranty very affordable for your budget. Cinch Home Services has three different coverage levels for you to consider:
- Appliances: Our Appliances plan ensures protection for everything from your microwave to your washer and dryer.
- Built-in Systems: With this plan, the warranty covers system components, like your heating and air-conditioning systems, plumbing, water heaters and much more.
- Complete Home: You can have the best of both plans with our Complete Home plan, which covers major appliances and in-home systems.