While owning a home comes with many pleasures, the experience can also result in facing unexpected repair expenses. The household budget is in jeopardy whenever an appliance stops working or the water heater needs repair.
Fortunately, homeowners who use a home warranty to supplement an insurance policy get to enjoy financial relief in the face of any situation.
Before buying a home warranty, however, it’s a good idea if we understand the costs, benefits and coverages.
How Much Does a Home Warranty Cost?
The cost of a home warranty varies depending on how much coverage we might need and where we live. On average, costs normally range between $300 and $1,000 per year.
While home warranties typically renew on an annual basis, many providers allow for monthly billing contracts. This means we can expect to pay $25 to $85 per month instead of paying one lump sum.
It’s important to understand that we’ll incur other costs in addition to the plan costs. For example, there is normally a fee charged whenever a trade technician is sent out to our home to inspect any needed repairs.
These fees are similar to an insurance deductible and are paid out directly to each technician. They usually range between $50 and $100 per service call. If multiple visits are needed for the same repair issue, some providers will not charge any additional fees. If a return visit is necessary outside of a certain period of time (60 days, for example), then another fee may be applied.
An Example of a Home Warranty Situation
There are times when we might need to pay out of our own pocket to get repairs completed. This might be the case when the policy maximum coverage limit has been exceeded. Another possibility is that repairs are needed on an item that is specifically excluded from the warranty.
For example, our refrigerator stops working but it is deemed to be beyond repair. A new refrigerator will cost us $2,000. If our home warranty has a coverage limit for refrigerator replacement or repair set at $1,500, then we will need to pay the additional $500 out of our own budget.
What is Covered by a Home Warranty?
A home warranty provides for service, replacement or repair of major systems and appliances in our home. These might include the heating system, air conditioning system, refrigerator, stove, washer/dryer, garbage disposal and ceiling fans.
Before buying a home warranty, we must be prudent in carefully reading the plan in its entirety so we know exactly what is covered and what isn’t covered.
Using a Home Warranty
When a repair or replacement becomes necessary, the process begins by calling the warranty company and filing a claim. Either the homeowner or company will contact a service provider to come to the home. Repairs are usually done immediately. If the service provider needs to order specific parts, then we’ll need to wait for that part to arrive.
Taking the time to understand and purchase a home warranty has the potential to save us money in the long-term when costly repairs become necessary around the home.