Are Home Warranties Really Worth It?

You’re all moved into your new home. Everything is sparkling clean, and in many cases, brand spanking new. Do you really know, though, the condition of the appliances you bought with the house? Will the furnace last more than a few years? Is that “smart” refrigerator really so smart? If you own a TV, odds are you’ve seen ads for home warranties. Even your email spam filters are packed with offers. And while it’s generally a good idea to avoid industries that spam you, there are some benefits to home warranties.

What is a Home Warranty?

A home warranty is essentially an insurance plan for your home’s appliances in case they break or wear out. They cover:

• HVAC units
• Plumbing systems
• Electrical systems
• Washers and dryers
• Garbage disposal
• Stoves and ovens
• Dishwashers
• Refrigerators and freezers
• Water heaters
• Ceiling fans

You can buy extended plans to cover things like hot tubs and pools. Some even cover sheds and detached garages. However, home warranties do not cover your home’s structure, such as roofing, foundations, or drywall.

Cost

The average cost of a home warranty plan is relatively reasonable, at about $600 per year. On average, an appliance lasts between 10-20 years. If you have to repair or replace just one appliance every two years, the plan could easily pay for itself.

Is it Worth it for Everyone?

If you’re moving into an older home, absolutely. A broken appliance can easily cost thousands. If you’re moving into a brand new build, with brand new appliances, maybe not, and generally, everything is still under warranty. Many home sellers throw it into the purchase price. You might be better off, though, just putting the cost of the premium into a savings account, so you have the money when an appliance does break down. Before shopping for a home warranty, be sure to do your homework. Check with your local Better Business Bureau and try to get some local referrals. Some appliance stores might have suggestions. Featured image via Pexels.