What Is a Home Warranty? The Benefits of Home Warranty Coverage

What Is a Home Warranty?

While a home warranty and homeowner’s insurance may seem similar, they are very different. A home insurance policy protects against damages like fire, earthquake, and damage that can affect your personal possessions.

A home warranty, on the other hand, is a policy that you can get from a company that will give you a limited amount of repairs and replacement on components like electrical systems, plumbing, HVAC, and so on. Sometimes, home warranty coverage might also include things like appliances, which a home insurance policy would not cover.

A home warranty usually costs a few hundred dollars a year, which you can either pay installments or in a lump sum up front. Often, the price depends on the type of property and whether it is a condo, townhome, or single family home. The cost will also vary depending on which type of home warranty plan you choose.

Do You Need a Home Warranty?

There are several benefits to a home warranty. If you don’t have an emergency savings, having a home warranty can save you money if big ticket items in your home break. If you are a first time home buyer, it can also provide reassurance that you will not have to worry about spending additional money on things in your home that might need repairs. Home warranty companies can send out contractors and help you maintain many things in your home.

However, home warranties might not feel worth it if you have a large savings that can cover things in your home that might need repaired. Additionally, there are sometimes gray areas in home warranty policies that mean certain things might not be covered under your policy. This can become frustrating for people who pay for a warranty, only to have their repair not be covered.

Conclusion

A home warranty can protect against a lot of expensive unforeseen costs. If you want to protect yourself against some costly repairs that would not be covered by a home insurance policy, you can consider buying a home warranty.

If you are not as worried about repairing things like appliances, air conditioning, and other such components, you can consider purchasing a home warranty for a few hundred dollars a year. Overall, it is up to you whether or not a home warranty is worth it.