How to Cover the Extras With a Home Warranty

Estimated reading time: 3 minutes

Man Repairing or Cleaning a Dryer

A home warranty is a yearly service contract designed to protect your important household items, home systems, and appliances. Home warranties cover the repair and replacement of the vital elements that keep your home operating comfortably, safely, and effectively. Home warranty policies offer a financial safeguard against the unpredictable but inevitable failure or just the simple wear and tear of these household essentials. It’s an optional but valuable layer of protection for your home and your peace of mind.

The average cost of a home warranty policy ranges between $450 and $600 per year, depending on the coverage you select. Home warranties are typically 12-month contracts and many providers let you pay monthly or annually. For most home warranties, you have to pay a service fee (similar to a deductible) of $75 to $125 each time you request service.

Some homeowners believe that an annual home warranty is worth it to provide financial protection from potentially costly HVAC, plumbing, electrical, or appliance repairs or replacements.  It’s “insurance” for these basic household elements and just like regular homeowner insurance, you hope you’ll never need it but you are grateful for the coverage when you do.  As an example, the average cost of repairing or replacing an HVAC system in the U.S. is $3,615. Most people will agree that that would be a big hit to your monthly budget.

Here are some factors to consider if the annual cost of the warranty would prevent a significant hit to your wallet. Based on the inspection of your new home, you should be able to determine which appliances and systems are at risk of a needed repair or replacement in the near future. Here are the more costly ones:

  • Air conditioners and heat pumps last 10 to 15 years.  Forbes Home article explains, “Basic repairs might set you back $100 to $650, but if the contractor discovers major issues requiring expensive parts replacements, air conditioning repair costs can go as high as $2,500 or up to $5,000 if you need to replace the entire condenser.”
  • Furnaces and boilers last 15 to 20 years. According to Forbes Home, “The average cost to repair a furnace is $300, but prices might reach $1,200 depending on the extent of the problem. If a specific component is damaged beyond repair, you could spend up to $2,000 for a replacement part. Depending on the age of your furnace, it may make more sense to replace the unit as a whole. New furnace prices run between $2,800 and $6,800 for most homeowners.”
  • Water heaters’ life is 6 to 13 years. Bob Vila states, “Water heater repair costs have a typical range of $221 to $964. The type of repair needed strongly influences the final price although the national average repair cost is $591.” When it starts making strange noises, don’t wait to immediately check out nine other warning signs.

There may be a year where multiple smaller repairs might be necessary with electrical, plumbing, plus kitchen and laundry appliances. But the major costs are ones you don’t want to have to put on your credit card.  Take an assessment of the age and condition of covered items. 

Most of all, don’t wait until it needs repair.  A home warranty will not cover pre-existing problems, and there’s usually a waiting period of 30 days before you can submit a claim. If you would like to discuss anything about home warranties, home inspections, or my recommendations of which companies to consider, please contact me!