Home Warranty: Yes, No, Who?

[airjay75]

Well, I did not even look into a home warranty when I just purchased my first home. I tend to have an aversion to all types of extended warranties, but, perhaps I am jaded by my experience with extended car warranties where it seems like any repair needed is excluded from the terms of the warranty.

For me, I think it is very prudent to insure against unexpected catastrophes in life - death, serious illness and disease, major destruction of property, lawsuits, etc. You often buy these types of insurance in hopes that these things will never happen, but with the peace of mind that, if they do, you have some financial protection.

Home warranties and extended warranties, to me, are completely different. There, you tend to be insuring against something that you know will eventually happen. You certainly hope it won't for many years, but you know, at some point, the appliance is going to malfunction, the plumbing will need repairs, etc. Since I know these types of things are going to happen, I can plan ahead, financially, to deal with it. And, when it happens, I can be in charge of who I hire to fix/replace it, and I won't have to be hassling with some home warranty company who will try to find any reason they can to conclude that it isn't something that is covered.

I say this even as someone who has had to shell out a good $3,000 to fix some plumbing problems I discovered within the first couple of months living in my new house. But, my general expectation has always been that I need to plan for maintenance on my property per year to be roughly equal to 1% of the value of my home. I have always said to myself that if I wasn't financially able to handle that amount of maintenace every year, I was buying a home I probably couldn't afford.

[PolandSprings]

Our house came with a 1 year home warranty. So far, it has been very useful. The compressor on the heat pump broke and needed to be replaced. After replacing it, it was found that another part also needed to be replaced otherwise the compressor would blow again. We paid $100 for the service call and a disposal fee but nothing for the parts. I do know that one repair was not covered, but there was a leak in the kitchen faucet that was covered. For us, it has been worth it and we've discussed renewing.

[FCNova]

I personally won't get one. I like to be picky about people who work on my house, and when I find a good one continue to use them. With the home warranty I think you're usually at the mercy who they send. I've heard of them also denying claims sometimes. Like any insurance policy though whether it ends up being worth it can have alot to do with luck(or bad luck).

[Mike From NIU]

Originally Posted by spencgr

Do not be so naive to think that they will be willing to replace something easily. They will continue to bandage all appliaces until they, literally, die. What this means is that you will have inefficient systems and appliaces during the bandage period. And, by some miracle that they do move towards replacement, don't expect to have any "say" into the brand, model, options of the replacement item. And, most people would rather replace systems and appliances BEFORE they die, so you are not sitting for weeks without an AC or your refigerator.

I found this to be the case, too. We had water heater heating elements fail, due in part to bad internal wiring, and a leak from our water heater drain valve, and they kept charging the co-pay ($100 per pop) when we thought that the 25 year old water heater would be replaced. We realized that when the water heater did fail, it would be replaced by a small, energy inefficient model if it was paid for by the warranty company at all. So, we did not renew the warranty, which was a gift from our real estate agent, and paid for the new water heater ourselves when the tank started to leak (7 months after the home warranty expired).

I'm not especially handy myself, but between the fine print and the limitations of what they do offer, I would generally decline one of the home warranties. Instead, my wife and I budget for various repairs and are fortunate to have found some trustworthly contractors and repairmen who can work on our timetable and who must resolve the issue to our satisfaction.

[boyd888]

Why would you need a home warranty on a brand new home anyway? Most (if not all) of your major appliances should still be covered by a manufacturer's warranty. A new home should not need that much maintenance.

OP, from your posts in this thread it seems like you think a home warranty is a "cheaper" way to keep maintenance costs down on a home (ie guaranteed $600 vs possible thousands without a warranty)? This is not true. Keep in mind that the warranty company will look for any reason to deny your claims.

I think home warranties are a nice thing for a seller to provide as a bit of piece of mind to the buyer (at least on older homes), but I would not purchase one for myself.

[Middlin]

At one point we moved to a TH that was only 3 years old, but you could tell everything was builder grade and all these TH's were slapped up pretty quick. We did purchase a home warranty and the first week we moved in something happened w/ the AC. We were pretty broke so it did give us some peace of mind for really big ticket items like the furnace and AC. We renewed after 3 yrs when all our neighbors AC units were going since we planned on putting it on the market that same year. We bought a SFH that was 3 yrs old as well, but better appliances, etc and felt it wasn't worth it. Now 4 hrs later everything still works great.

[lordntaylor]

Waste of money; they charge you $100 deductible only to not cover the problem.

[michgc]

We had a good experience with our home warranty in our new-to-us home (in Chapel Hill). The house was 10-years old. We had someone come out to fix the stove. It's a Viking and you supposedly have to use only Viking parts, which are likely pretty expensive. It cost us $60. Someone also came out to fix the air conditioning. Again, it cost us $60. Now I'm not sure if I would have bought the warranty, but it came with the home. But we didn't have any problems using it, and the co-pays were $60.

Funny thing is we also got one with our 50-year old home in Vienna, but never needed to use it. Yeah, homes and appliances were built better back then.