Does the 2-10 Home Warranty make sense? (credit, new house)

[Stonewall17]

With all the limits and exceptions in the 2-10 extended warranty does it pay to purchase it? It's not alot of money...less than $300 for the first year with a $50 fee per call. It includes coverage on new appliances (like your microwave which never breaks) that come with a new house plus limited coverage on AC, Elec and plumbing. Has anyone had an experience with this warranty? Please share.

[David in JAX]

No it doesn't and I will tell you why. The vast majority of appliances, A/C's, water heaters, etc. experience two types of failures. The first type is their natural end of life failure after many years. The second is called product infant mortality where they fail in the first year or less due to a factory defect. If you place all home equipment failure rates over time on a graph you get an inverted bell curve where there is a large number of failures in the first year, less and less failures until the middle of its useful life, and then more and more failures until you hit a large number of failures at the end of the useful life. The end of useful life is after the extended warranty time period. So, the seller of the warranty knows that you are buying a policy during a time when the items will probably not fail.

[Stonewall17]

Originally Posted by David in JAX

No it doesn't and I will tell you why. The vast majority of appliances, A/C's, water heaters, etc. experience two types of failures. The first type is their natural end of life failure after many years. The second is called product infant mortality where they fail in the first year or less due to a factory defect. If you place all home equipment failure rates over time on a graph you get an inverted bell curve where there is a large number of failures in the first year, less and less failures until the middle of its useful life, and then more and more failures until you hit a large number of failures at the end of the useful life. The end of useful life is after the extended warranty time period. So, the seller of the warranty knows that you are buying a policy during a time when the items will probably not fail.

You pretty much confirmed what I thought all along. I can't tell you how many letters and phone calls I get from these people. They always come on with a pitch about the average cost, if you don't have the warranty, to repair this appliance or replace that appliance ... the familiar fear tactic that insurers use.

[titaniummd]

Originally Posted by Stonewall17

With all the limits and exceptions in the 2-10 extended warranty does it pay to purchase it? It's not alot of money...less than $300 for the first year with a $50 fee per call. It includes coverage on new appliances (like your microwave which never breaks) that come with a new house plus limited coverage on AC, Elec and plumbing. Has anyone had an experience with this warranty? Please share.

I had it on my older house in MD ($450/year, $200 deductible). A lot of things broke down and it was helpful. I was given a credit towards the purchase of a new HVAC, plumbing repairs and the stopped up sink.

For a new home, I don't see a big benefit so you have to weigh the costs of the annual fees + deductible versus the cost of labor and parts for something to break down.

[stevep]

We have it and used it several times... garage door opener, refrigerator, washing machine, dryer and these were all on a home built in 2002. Actually, they're coming again tomorrow for the a/c, so for me it was worth the money.

[riveree]

I hate the warranties. I've used them when they came with the house, but once they expired I never renewed them.

The whole idea of putting a middleman between myself and the actual company doing the repair (the plumber, the electrician, etc.) just complicates things, IMO.

[Stonewall17]

Originally Posted by stevep

Actually, they're coming again tomorrow for the a/c, so for me it was worth the money.

So they are coming tomorrow ... what a coincidence!
I guess you could say it's a roll of the dice. I had a warranty on my older house in NY and used them only once in all those years. So voila!

[stevep]

It was a quick fix - they would have charged me $130 if I didn't have the warranty. With the warranty it cost $50 (but I also pay $330 per year). So I guess it depends how lucky you are. Our neighbor had their a/c compressor go out a couple of months ago and it was covered. I think that would have run over $1k to replace and we actually had the same problem 13 months after purchasing our home but the a/c company decided to cover it even though it was a month past the original builders warranty.