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I got a home warranty when we purchased our house last march. We actually made a couple of claims for minor things. So we paid the $60 fee, someone came out, and fixed it and everything was fine.
Now they are offering to let us renew it for $375. Is it worth it, in the opinion of real estate professionals (and others) here. I'm not usually into buying extended warranties etc. But it was sort of nice to only have to worry about the $60 co-pay. The company was Alliance Home Warranty. Thanks in advance for your opinions.
I suspect that your home warranty has served you as cost effectively as possible already. The low cost of most warranties can make them a fairly smart move for SELLERS that want to make their home more appealling to people unfamilar with buying a home, but in my experience (as both a real estate agent, home owner and investor) the cost savings rarely add up to the ongoing renewal cost.
The biggest problem is that the polcies are written to disallow a lot of things that many warranty holder feel ought to be covered -- stuff wearing out or breaking due to heavy use is often excluded.
Since you already did get some "minor things" fixed and you only paid $60 that seems fair. If the same rules apply and something "major" like HVAC replacement comes up then it would be no-brainer to pay $375, but I doubt they will happily put in a new furnance or A/C for $60. Those things can cost thousands and thus the exclusions exist so the warranty company makes money...
The key is simply to evaluate the condition of the major stuff -- even low end A/C and furnace will be good for 7+ years. If a trustworthy HVAC company comes out to do annual service and says the thing is on its last legs and your can get a copy of the warranty that spells out you're fully covered that the $375 would seem like a no-brainer, but more often the warranty will ONLY cover the blower motor once it seizes and not merely starts squealling. And the furnance guy is gonna tell you that spending $500 for service on a squeaky blower motor is not smart when when you can get a more efficeint furnance for a bit more...
I usually do not extend warranties on individual products. However, you have already seen the value in having this warranty. If your heater, central air, water heater, etc. are older I would definitely extend it.
This is an insurance policy.
They make their profit by not paying out as much as they collect.
So, the odds are against policy holders benefitting more than they spend.
That said, if you are in a position where you have $375, but $2000-$3000 for HVAC repair/replace would hurt badly, then it might be a good hedge.
I like them for clients who are stretching to get into a home, and an unforeseen repair can destroy their budget.
But, it is not a slam dunk that it will or will not pay off for you.
And they will do a nice job of ______ rigging your a/c unit so it blows. Dream on if you think they will replace it. Dishwashers are guaranteed to run; not to clean. Many electrical componenets are not covered.
I personally would not renew, I take care of and am fairly knowledgeable about repair or replacement issues.
If you are not this kind of person you might renew. Keep in mind the type of contractors they use are not the best or they would not discount their services to the warranty company and the products they install will not be the best.
I like to take care of my own and if it breaks, to determine what solution and product I want to install.
As a home owner I will never be without a policy like that.
Over they years I have had A/C replaced (cost $275 for non-covered items), duct work replaced, hot water heater replaced, dishwasher replaced, and dryer repaired plus several visits by a plumber. For me the policy has paid for itself and then some, year after year.
The question you need to ask yourself is "Can I afford not to have this policy?" If you feel that you can afford to replace/repair on your own then you shouldn't renew.
If you are not this kind of person you might renew. Keep in mind the type of contractors they use are not the best or they would not discount their services to the warranty company and the products they install will not be the best.
This has not been my experience.
My experience with the contractors is that they have mostly been "the little guy", you know the one not going to scare you into buying something you don't really need.
My Rheem hot water heater was replaced with a Rheem. My GE dishwasher was replaced with a GE dishwasher.
Worth it to us. I am wondering how they even make money...we have made so many claims...lol...
LOL! Same here.
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