Unlike condos or townhouses that typically require you to pay for homeowners association fees in exchange for upkeep and regular maintenance, you have to cover the costs of home repairs for most standalone houses. Some homeowners opt to purchase home warranties to protect themselves from paying large fees out-of-pocket should something break in their new homes. Learn more about home warranties and if it’s worth purchasing one below.
What is a home warranty?
A home warranty is a service agreement that homeowners can buy to cover specific home repairs. So, instead of finding and hiring contractors to fix a home component, home warranty companies will pay for the repair or replace the item for you. There are usually limitations for replacement so you’ll need to review the service agreement carefully.
What does a home warranty cover?
The repairs covered under a home warranty varies depending on the policy purchased. Home warranty policies don’t cover items included in your homeowners insurance policy, but some typical repairs included in a home warranty are:
- Home appliances such as a washing machine, dryer, microwave, refrigerator, or stove
- Central air conditioning and heating systems
- Plumbing and sewage
Additional repairs such as pools and well pumps can be added onto the plan depending on the homeowner's needs.
How much does a home warranty cost?
A usual home warranty policy can range from $20 - $50 a month depending on your coverage. One thing to keep in mind before purchasing a home warranty is that you often have to pay for a trade service call fee before a contractor is dispatched to your home. The fee is typically $75 - $100 and if it takes more than one ‘trade’ to fix the item that’s broken, you will have to pay the fee multiple times to repair one appliance.
Are home warranties worth it?
Hiring a repairman, electrician or handyman costs $80 an hour, on average, before the addition of materials which are often marked up. If you have trusted contractors for repairs, then getting a home warranty may not be the best option for you. If you want to take the guess work out of how long the repair may take, any possible follow-up issues and finding the right contractor, then having a home warranty policy may be worth it. In addition, if you purchase an older home that may require more maintenance, a home warranty may work best for you.