Are Home Warranties Worth It?

[LOA Chandler]

I am a HUGE proponent of Home Warranties. Yes, it is an insurance policy of sorts. But you can't beat the $55 service call for a plumber, electrician, ac repair etc... I have them on my primary home and my rental properties. Saves me a lot of headaches.

[adolpho]

I used Crown home warrant 15 years ago in Phoenix and it was fraudulent.

[gentlearts]

When our house was for sale we had a policy which we used three times, and since our house didn't sell, we never had to pay anything for it. We chose our policy carefully so it would cover our geothermal and our septic system-many don't. Had we wound up paying for it at closing, it would have paid for itself on what we saved on the repairs. We probably will get it again when we relist, because we do have old appliances, and we'll probably use it ourselves.

[bigfatturkey]

if the high costs of certain major fixes are likely to put you in a very tight financial spot...then you should get the coverage/warranty.

as with any warranties/insurance coverage...the premiums are based on calculated risks for a large group of policyholders...so i'm pretty sure the insurance companies are not losing money...don't u worry about them.

so it all boils down to...whether or not you can afford to self insure....or perhaps transferring the risk to the insurance company by means of an insurance premium might be a better idea.

there's no way to determine if warranty/insurance is "worth it"...'cos the benefits can only be seen when something unfortunate happens...if you are covered, then obviously it's "worth it"....but if you are not covered..then you'd deeply regret it but it's too late by then. but if everything goes smoothly for years...then you'd probably think it's not worth paying for the warranty.

my suggestion is to get warranties for those things that would cost a lot to repair/replace....no point buying warranties for all things - big or small. small things you probably can afford to fix on your own. the more coverage the warranty provides...the higher the premium...so doesn't mean that more is good as everything comes at a price. you'd have to decide what is it that you can self insure....and what is it that you'd prefer to transfer the risk so as to determine a reasonable amount of coverage that you'd require at a premium that's reasonable to you.

are there options whereby you can decide to pay a higher deductible/co-insurance in exchange for a lower premium?

[kbhmsw]

I looked this question up because I was questioning the same thing. I had one plan, and we had several claims on it, so they didn't renew us (I guess we were costing them more than we paid LOL). That was AON Home Warranty. I noticed then that the vendors seemed "second rate". We then got a policy with Sensible Home Warranty, and so far their vendors have been second rate at best. We also found that these vendors, on both plans, didn't seem to really know what they were doing, in MOST cases, regardless of the nature of the repair. We might continue it for insurance against "big" appliances breaking, but it's also time-consuming in that the plans require one visit to "assess" and "authorize", and then a second visit to do the repair, and sometimes a third visit if the repair wasn't done correctly (which has happened several times now). Worth it? Highly questionable, especially if you lose money with the time you have to take off work for their multiple visits. But, one water heater replacment, for example, would probably cover the annual $400 fee. I think you have to measure the odds of stuff breaking versus the cost of fixing/replacing it, and versus the lower-quality vendors and more demands on your time. Overall, I would kind of prefer vendors who knew WTF they were doing and could fix/replace things in one, quick visit. You get what you pay for regarding these vendors.