Are Home Warranties Worth It
Whether a home warranty is right for you depends on several factors, including the age of your home, the quality of your appliances, and your own repair skills.
Chad Marzen, a home warranty expert and an American General Insurance Associate Professor of Insurance Law, told Investopedia, “If an individual has the funds to self-insure their appliances, then a home warranty may not necessarily be as pressing as the situation where maybe you are on a really tight budget and anticipate that an appliance may be in the last year or two or three of running. That might be more worth it for the consumer to get a home warranty to provide peace of mind. So, the issue of home warranties is a question of your risk tolerance for large expenses.”
Every home appliance and system eventually breaks down. If you’re handy, you might be able to do repairs yourself and save money. However, many homeowners don’t have the skills, tools, time, and patience to do their own repairs. In these situations, a home warranty can make financial sense.
Here’s why: According to the “1% rule,” you should set aside at least one percent of your home’s value each year to cover maintenance and repairs. For example, if your home is worth $200,000, you should budget $2,000 a year for maintenance. Another ruleâthe “square foot rule”âadvises you to budget $1 per square foot. So, if your home is 2,000 square feet, you should set aside $2,000 a year.
What Happens When Repairs Fail
Most home warranty companies offer service guarantees- parts and labor guarantee against recurring problems. Generally, if the item fails within 60 days, despite the repair being conducted, the company sends in technicians again at no additional cost. You dont have to pay another trade service fee .
A few companies like Cinch Home Services and Sears Home Warranty offer 180-day workmanship guarantees. Some companies have parts and labor guarantees of different time periods. Choice Home Warranty offers 90 days for parts and 60 days for labor.
Sometimes customers may be dissatisfied with the service or claim denial on the pretext of pre-existing conditions. Such disputes are settled by arbitration according to the service contract clauses.
Cinch Home Services: Our Pick For Bonus Benefits
- Claim response time: 4 business hours
- State availability: 48
- Year founded: 1978
Why We Chose It
Cinch Home Services is one of the older home warranty companies in the industry and its comprehensive policies make it a standout provider. In addition to its excellent coverage, this provider offers a 180-day workmanship guarantee and a number of uncommon perks and benefits, such as a homeowners deductible reimbursement and a $50 Green Reward that can be used for purchases of energy-efficient items, such as smart home systems, programmable thermostats and LED light bulbs.
Cinch Home Warranty earned 4.45 out of 5 stars in our rating system, and we consider it our top pick for bonus benefits.
+ Covers damage due to rust and corrosion, which is often excluded from home warranty coverage+ Provides a 180-day workmanship guarantee, which is six times the length of the typical guarantee+ Offers a potential wholesale price discount if you purchase a new appliance during your plan term
Cons:
Charges higher service call fees than many other providers Offers add-ons mostly limited to pool and spa coverage
Cinch Home Services offers three standard plan options: the Appliances, Built-in Systems and the Complete Home plans. According to our quote, customers can expect to pay between $35 and $62 per month for a Cinch Home Services plan.
Get your quote online: Fill out Cinch Home Services form for a free quote.
Read our full review: Cinch Home Services Review
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What Do Home Warranties Not Cover
Home warranties generally exclude anything not explicitly covered by the policy. And even if an appliance or system is protected, home warranties won’t pay to repair/replace anything your homeowners’ insurance policy should cover.
Home warranties also usually exclude cosmetic damage , structural damage, damage from incorrect installation, pre-existing conditions, power surge damage, or anything not considered normal wear and tear .
When Do Home Warranty Companies Dispatch Contractors
Most home warranty contracts state that the contractor dispatch can take 2-4 business days. The customer support teams accept claims 24/7 and try to schedule services according to the convenience of the customer plus the service contractor. Most companies may try to expedite service delivery in cases of emergency requests.
Our reviews indicate that the average time taken to send in a service technician is 48 hours. We have some reports of technicians taking a week to arrive, either because of a heavy demand period or some scheduling difficulties. It also depends on the contractors with some reputable ones being more prompt than others. There are also a few reviews stating that they arrived the very next day.
There are a handful of companies that allow you to choose a contractor, or hire your own, while they pay for the approved services. Here, the time variable is the duration to receive payment. Our reviews indicate that these companies may take 7-10 business days to send in reimbursements though there are cases where it has taken many weeks.
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All About What To Look For In A Home Warranty Inspect
Coverage limitations: If repair work on a certain problematic product are typically expensive, ensure your strategy has high coverage limitationsâ otherwise, when it heads out, your house service warranty may only cover a percentage of the expense to fix it. Also, if you own an uncommon/specialty brand name or kind of home appliance, double-check that itâs included in the list of covered brands.
If you think that a few of your items might be on their last legs and need to be replaced in the next year, make certain youâre getting a home guarantee that will cover replacement when the time comes. Versatility to choose/upgrade protection: This is the most crucial plan function for lots of people .
Hence the appeal of the choose-your-own, âa la carteâ: home warranty strategy. If you select this, make sure and ask about available upgrades like preventive upkeep and increased coverage limitations for big-ticket items in your plan. Think about the age of your home youâre purchasing, the age of the major systems and appliances, and whether you feel confident in getting repairs done or doing them yourself when something breaks down.
If your house or devices are older and youâre unable to focus on home repairs, a home guarantee may provide a helpful very first layer of security, plus peace of mind.
Who Needs A Home Warranty Plan
Homeowners insurance covers some major damages to your home but stops at a certain point. In the unfortunate scenario of a natural disaster, your homeowner insurance should cover the costs, but it wont cover common mechanical problems. For example, lets say your HVAC system is acting up. You cant wait to fix it because its the middle of July and hot. While a homeowners insurance plan wont cover this problem, a home warranty plan will.
Regardless of the age of your home appliances or built-in systems, theyre bound to experience some normal wear and tear. Once the manufacturers warranty is up, youll be left to front the costs. A home warranty can protect your budget.
How do you know if you need a home warranty plan? Here are a few reasons a home protection plan from a trusted home warranty company like Cinch Home Services could be right for you:
Life is expensive. With mortgage payments, car payments, bills and possibly student loans, unexpected maintenance and repair costs might be out of the question. By paying a little each month, you can avoid stressful financial situations and have access to affordable repairs and replacements when you need them most.
What kind of home warranty plans are out there? Cinch offers three plans:
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What If The Breakdown Recurs After My Service Visit
It can be frustrating when your home system or appliance breaks down again after the service professional repaired it. American Home Shield offers members a 30-day workmanship guarantee on repairs performed by our third-party service professionals. This means that if you have an issue regarding your completed appliance or home system repair within 30 days of your original service, well send a contractor back out for free.
However, if its after the 30 days, youll need to make a second service request and pay another Trade Service Call Fee. You can access your American Home Shield claims and requests for follow-up service through MyAccount.
Some Known Questions About How To Choose The Best Home Warranty Top10com
A house service warranty business can send technicians in their network numerous times in a row to try to repair a covered product before replacing it. Numerous house warranties will decline to cover products that are over a particular ageâ i.e., 10 years. In intricate house systems, a home service warranty frequently covers only specific elements, however not the whole system.
If you have a stoppage that breaks the entire system, however only interruptions are covered, the service warranty might repair the blockage but not cover the expense of repairing all the issues caused by the interruption. The simplicity of reporting a problem to a house warranty provider is a big part of the appeal for lots of customers.
Within a predetermined quantity of time, the business will send a certified tradesperson in its network to assess the problem. home warranty comparison chart. In the majority of cases, the home warranty company will then contract and pay for the suitable repair serviceâ although the property owner will most likely be accountable for a copay or deductible.
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Best Average Plan Cost: Totalprotect Home Warranty
With an average yearly premium of just $423, TotalProtect is our top pick for Best Average Plan Cost. The company offers coverage in all 50 states plus the District of Columbia. While TotalProtect had an excellent overall score it did have lower customer satisfaction review ratings with the Better Business Bureau than most companies we reviewed. Still, if plan pricing, especially for a basic plan, is the main consideration then TotalProtect could be the way to go.
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Average annual plan cost of $423
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Six-month service guarantee
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No Better Business Bureau profile
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Relatively high service fees
The average TotalProtect policy costs $423, with a payout cap of $1,000 – $3,000 per covered item per year. The company says it responds to repair requests within 2-24 hours, with an average time of 13 hours.
TotalProtect offers three plans:
- ApplianceProtect : washer/dryer, range/cooktop/oven, range exhaust hood, refrigerator, dishwasher, microwave, and built-in trash compactor
- SystemsProtect: : air conditioning and heating systems , accessible ductwork, electrical wiring, ceiling fans, garage door opener, smoke detectors, interior plumbing and gas lines, garbage disposal, water heater, sump pump, plumbing stoppages, whirlpool/jetted bathtub, toilets, and up to $1,200 of emergency lodging reimbursement
- TotalProtect : everything covered by the ApplianceProtect and SystemsProtect plans plus homeowners insurance deductible reimbursement of up to $1,000
What Happens If My Service Professional Cant Fix My Appliance Or Home System
If you make an American Home Shield service request for an appliance or home system and your assigned service professional determines that the covered item cannot be repaired, that means it needs to be replaced, subject to the limitations and exclusions of your contract.
If a replacement is necessary, we will cover the cost of replacing your covered home system or appliance up to the coverage limit listed in your contract. Some replacements cost more than our home warranty plans can cover. When that happens, well pay up to the coverage limit, and youll be responsible for covering the rest.
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Are Home Warranty Companies Regulated
Home warranty companies are regulated in all 50 states through consumer protection laws. According to Angi, 32 states specifically require home warranty companies to be registered or licensed through the states insurance department. For example, Texas requires these companies to be licensed by the Texas Real Estate Commission. Likewise, Section 634.303 of the Florida Statutes specifies that such companies must operate under a license, which is renewable every year. Home warranty companies in California must also seek licensure through the states department of insurance.
Nations Home Warranty Breakdown
States Covered
Nations Home Warranty operates its business only in the state of Texas. If you live on the West Coast, you might, for example, look at the best home warranty companies in California.
Waiting Period
Unlike most other home warranty companies that have a 30-day waiting period policy, Nations Home Warrantys waiting period is only 15 days. Customers can start filing claims as quickly as 15 days after purchasing a coverage plan.
Deductible
Nations Home Warranty charges a cost of $65 as deductible which is quite fair compared to the industry average.
Renewal Policy
Customers can renew their policy at any time. Should you wish to renew your home protection, it is recommended to call their hotline and speak to a service representative.
Cancellation Policy and Fee
Nations Home Warranty charges a $50 cancellation fee which is higher than most other companies.
Service Call Fee
A service call fee of $65 is charged for every customer filing for a claim.
Home Inspection or Maintenance Records Required
Nations Home Warranty does not require a home inspection or maintenance recordscheck for policy subscription.
As part of our Nations Home Warranty review, heres a breakdown of the basic information you need to know:
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Americas First Choice Home Club: Most Coverage Options
- Claim response time: 2 business hours
- State availability: 49
- Year founded: 2009
Why We Chose It
Americas First Choice Home Club earned 4.54 out of 5 stars in our scoring system, and it offers four plans to give homeowners plenty of easy options for the perfect coverage. The provider also features the shortest claim response time of any provider on this list.
All repairs and replacements approved by AFC Home Club are covered by a plan-length workmanship guarantee, which means that if a covered, repaired item breaks down again during your plan, you can request service without paying an additional fee. AFC Home Club also offers multi-year plans, which means you can extend your workmanship guarantee to up to three years .
Pros:
+ Extends a plan-length workmanship guarantee + Offers security benefits, including access to an emergency alert network and discounts on home security systems+ Allows you to choose your own contractor
Cons:
Charges premiums that are on the higher end of the industry average May deny claims not filed within 24 hours of noticing the issue
Americas First Choice Home Club offers four plans: the Silver Plan, the Systems Plan, the Gold Plan and the Platinum Plan. AFC Home Club allows for added customization by offering a flexible service call fee model. Customers can choose from a $75, $100 or $125 service call fee. As a general rule, the lower your service call fee, the higher your monthly premium will be.
Read our full review: AFC Home Club Review
Thoughts About The Best Duration For You
Having taken numerous factors into consideration as you can see above, we recommend starting out with annual contracts. When you purchase your first home warranty, there is a lot to understand in order to make the best of it. You also have to learn how much lifespan do the systems and household appliances have left and the likely problems. People who understand the service contract limitations well are generally quite satisfied with the savings.
Once you have a year of experience, you can choose to continue with multi-year plans or switch service providers if you arent happy with the previous one or you want to get some nice discounts.
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Important Home Warranty Timeframes
So far, we have seen the details about the most famous of all timeframes mentioned in the service contract, the duration. A home warranty contract lasts for a year, at the least, but there are a bunch of other timelines and deadlines mentioned in the service agreement that are equally important to note. Lets take a look at them.
What To Do When The Home Warranty Is About To Expire
When the home warranty plan gets closer to the expiry date, you can either renew the contract or let it lapse if you did not find the warranty useful. Alternatively, you could explore a different companys services.
It is important to keep in mind that a waiting period kicks in if the home warranty purchase decisions are made after crossing the date of expiration of the contract. To avoid the waiting period, you should either renew or change companies before the expiration date.
Further Reading A guide to renewing or changing your home warranty provider
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How American Home Shield Compares To The Competition
Lets look at some of the other major home warranty providers and see how American Home Shield stacks up against them.
How It Compares to Select Home Warranty
If you compare pricing between American Home Shield and Select Home Warranty, the price range is similar. Likewise, select has a good reputation for customer service and a fast response time for service requests. When you look at the customer service rating, however, reading customer reviews, its obvious that American Home Shield is better reviewed.
Where Select managers to edge out American Home Shield is in the service fees, which are lower for Select Home Warranty. They range from about $60 to $75. Select also offers the same number of primary plans as American Home Shield does, making them very similar in a lot of ways. Customers should know that Select home warranty is only available in 46 states, compared to American Home Shields 49 states.
How It Compares to Choice Home Warranty
When we compare American Home Shield to Choice Home Warranty, the prices are very close. Choice sometimes charges slightly less than American for the plan premiums, and its service charges can be a little lower as well. However, American Home Shield is available in more states and has a number of additional plan options. American Home Shield has also been in the home warranty business much longer. Choice Home Warranty is relatively new, having been around for about 12 years, compared to American Home Shields 49 years.