4 Myths About Home Warranties
How do home warranties actually work?
Home warranties are either the biggest scam ever or the most useful product you could ever buy, depending on who you ask. They’re divisive, with plenty of people singing their praises while just as many feel distrustful of them. In reality, there’s no “one size fits all” with home warranties, and there are various myths surrounding them that keep them feeling vague and confusing.
Myth #1: They cover 100% of your costs
With most home warranties, the initial purchase of the service doesn’t mean you’ll never pay a penny for home maintenance that year. Generally, each new issue might entail a service fee of around $100 that goes toward procuring and helping schedule your service. Plus, the “fine print” on every warranty outlines exactly what’s covered. Some give categories or items like “garage door opener” and “leaks” but also get more specific within the contract about exactly what they’ll help fix about a garage door, or which leaks are included, or up until how high of a dollar amount.
Myth #2: They can work like an emergency service
While good home warranties will likely save homeowners quite a bit of cash, there is a tradeoff. Without a home warranty, if your plumbing backs up, you call a plumber and hopefully have someone at your house later that day so that you can prevent any water damage and continue using your drains and toilets.
However, with a home warranty, there’s much more back and forth: you call them, they call a plumber, the plumber calls you to determine the issue and whether they can help, and if they can’t then the whole process starts over. If they can, you’re still stuck with their schedule and are likely to wait a bit longer than if you’d been able to shop around for the quickest service time.
Myth #3: They’re all scams
They’re not a magic wand, they’re not free, and they might take a while to deliver service - but overall, good home warranties can be a helpful safety net, especially for new homeowners who might not know exactly what they’re inheriting or what issues the home might have. It’s a good idea to read reviews, ask neighbors for recommendations, and shop around, because they’re not all built the same. A good metric to keep an eye on is the percentage of claims paid out by a given provider. Some are more reliable and less confusing than others, but on the whole they can be a useful money-saver.
Myth #4: A home warranty is the same as homeowner’s insurance
Home warranties and homeowner’s insurance cover very different things. Put simply, home warranties help cover normal expenses of homeownership, while homeowner’s insurance helps cover expenses if the worst were to happen. Incidents like fires, theft, and natural disasters fall under homeowner’s insurance. Normal wear and tear, appliance breakage, and old age are all covered by home warranties. So, although homeowner’s insurance is generally required with a mortgage and is certainly a smart choice for any home, statistically you’re less likely to suffer a fire than, say, a leak in the pipes or a broken down fridge. Those smaller (yet very inconvenient and potentially costly) incidents come up more frequently, and good home warranties are built to shoulder their costs and protect your budget.
Home warranties aren’t the best fit for everyone, but for those who can find a reliable provider and who aren’t familiar with the potential issues in their home, they sometimes save the day!
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