Ask 10 different people about the value (or lack
of it) of home warranties and you'll probably get
10 different responses--everything from "huge waste
of money" to "best thing we ever did. It saved us
$2500!"--and just about every other comment in between.
Coverage. A home warranty covers repair or
replacement of some major and minor items and components
of a house. Typically, they will be on a 1 year duration,
beginning at the time you take occupancy. Some of
the items and components that are typically covered
are:
- Central Heating and Air Conditioning
- Electrical
- Refrigerator
- Range and Oven
- Microwave
- Garage Door Opener
- Doorbells
|
- Plumbing
- Water Heater
- Washer and Dryer
- Dishwasher
- Garbage Disposal
- Trash Compactor
- Water Softener
|
Costs. The cost of a warranty will generally
range from $300 to $600, depending on the level of
coverage and/or the size of the house being covered,
and will usually carry deductibles of between $25
and $100.
What you are buying, in essence, is an insurance
policy protecting against the breakdown of any of
the covered items. Like any insurance policy, its
value is tied to its use--if you never use the warranty,
you could have saved its cost. If you do have a need
for it, you very likely may have saved money.
Are they a wise purchase? In a newer home
(less than 5 years old for example) a warranty may
not be necessary, other than for peace of mind. As
a general rule, the components covered by a home warranty
last longer than 5 years. In a home aged from 5 to
15 years, a warranty may be a wiser consideration,
since the upper end of that age range is often within
the life expectancy of such items as refrigerators,
stoves and air conditioning systems. In a home that
is aged 15 years or longer (especially one with older
systems and appliances) a home warranty should bear
strong consideration since the likelihood for repairs
or replacements goes up as the age of a house increases.
$500 in warranty and deductible costs are obviously
preferable to paying $2500 or $3000 for a new heating
system should you need it.
