Why you should get a home warranty in 2024
Many Americans are starting the new year by reviewing their finances and making strategic moves to earn and save more in 2024. This practice can also be helpful for homeowners. After all, understanding what costs you may incur in the coming months can help you plan ahead and potentially avoid a financial bind.
A home warranty can be a valuable tool for covering the costs of repairing or replacing your appliances and household systems when they break down. Unlike home insurance, which covers your home and belongings from unexpected events like fires and natural disasters, a home warranty is essentially a service contract that covers normal wear and tear.
This extra coverage could come in handy if you're suddenly faced with unexpected and costly repairs or replacements — and it may be worth considering a policy in the new year.
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Why you should get a home warranty in 2024
Here are a few reasons you should consider getting a home warranty in 2024.
A home warranty could help you save money
A home warranty could benefit you if you're not sure of the condition and warranty status of your appliances and major systems like your heating, air conditioning and plumbing. Having a well-crafted warranty contract in place could protect you against the high cost of repair or replacement of these household items.
For instance, what if your air conditioning unit suddenly goes out? The average cost of a new central air conditioning unit ranges from $2,500 to $7,000, according to This Old House, including installation. Many home owners operating on a tight budget might struggle to afford such a substantial expense.
Generally, when a covered item breaks, your warranty should cover most of the cost, while generally, you're responsible for a service fee. In some cases, you may be responsible for a non-covered modification.
Bruce Ailion, a Realtor and attorney at RE/MAX Town and Country, explains the cost-benefit, even if modifications are involved.
"Replacing a $1,800 to $2,200 water heater with a home warranty may require $400 to $700 in non-covered modifications," Ailion says. "The same is true for a $2,400 air conditioner, but this charge is still better than the total repair cost, and one annual repair justifies the warranty cost."
Alion also notes that warranty costs vary by market and coverage.
"In my market, Atlanta, you can expect to pay $500 to $650 for a warranty," Ailion says.
Find out more about how a home warranty could benefit you here.
Home warranties can help lengthen the lifespan of your appliances
When you submit a claim for a broken home appliance or system, the warranty company will usually connect you with a service professional within 24 to 48 hours. The technician will come to your home to assess the issue, and if the item is covered, they will repair or replace it. There is typically also a deductible for the service visits, which is generally a reasonable fee to get your unit up and running again.
Being able to quickly and affordably rely on service technicians can help you get the most out of your appliances before they must be replaced. Many warranties offer unlimited claims visits, but most cap coverage amounts for specific units. For example, American Home Shield's heating unit warranty covers components and parts up to $5,000 per system.
Home warranties offer convenience and peace of mind
When a covered appliance or system breaks, it's reassuring to know you don't need to research and compare contractors to get the issue resolved. With most home warranty companies, you can submit a service request by phone or through the company's website. Once you pay the deductible, the warranty provider will assign a contractor to contact you and schedule a service appointment.
According to Thomas McCormack, a senior partner and broker for Resources Real Estate, contractors are incentivized to perform well on service calls.
"There is additional pressure placed on the contractor to perform well because their future involvement in the program as a source of business depends on it," says McCormack. "Contractors have told me they use it as a referral source because many clients they acquire through the home warranty program hire them for renovation projects and other things that are not covered by the home warranty."
Home warranties also offer attractive perks for home buyers
Home warranties can be an attractive benefit that home sellers may offer as part of the home sale.
"80% of buyers prefer to buy a home with a home warranty. Sellers offering a warranty typically sell for more and faster than homes not offering a warranty. There is the added benefit of not being sued by the buyer when a major system fails in the first year of the new buyer's ownership," Ailion says.
Warranties are often transferable, so the coverage can continue uninterrupted for the new owner. Before signing with a home warranty company, though, be sure to double-check with a representative or refer to the contract to verify whether you can transfer the warranty to a new homeowner.
Other important information about home warranties
Warranties typically require a level of maintenance on your part. For example, it's wise practice to clear about two feet around your outdoor air conditioning unit to keep it free from debris, leaves or overgrown bushes that could prevent proper airflow. In some instances, the warranty provider could deny your claim if they determine your appliance or unit hasn't been properly maintained.
The bottom line
Home warranties provide an extra layer of protection for your home appliances and systems beyond what a standard home insurance policy provides. If you're interested in a home warranty, do your due diligence by reading and understanding the contract to fully comprehend the costs and benefits. Run a thorough check of your home systems and appliances to determine which items could use extra protection.
