Home Warranty Costs

A home warranty is a plan that offers coverage on household systems such as heating, plumbing, and individual components like the hot water heater as well as household appliances. It is not a homeowner’s insurance. The price of a home warranty will vary based on such factors as geographic location, the items covered, and the amount of deductible selected.

The important thing to remember about any home warranty is that the annual contract is often called the deductible and if paid upfront (in a single payment at the time of renewal) it can save around $60 or more per year. Most home warranties have service call fees, too, and they can range from as little as $25 to have a specific provider pay a service call, but may also be as much as $200.

This is why it is important to carefully scrutinize the systems, components, and appliances covered. As an example, a refrigerator may be covered under a plan, but to replace it may cost $1,800 while the plan has a limit of only $1,200 for the appliance. Because of that, the policyholder would have to pay the $600 difference themselves.

Home warranty: bye type of service.

Other considerations and costs

• Some of the best plans offer individual policies such as appliances only, systems only, combination options and comprehensive plans. Some also allow for full coverage with add-ons that don’t typically appear in a home warranty, such as coverage for a home security system’s camera array.
• Many homeowners put such plans in place to cover unexpected breakdowns of items that receive regular attention, such as air conditioning systems or hot water heaters. Many argue in favor of them, insisting that a single major repair allows the plan to effectively “pay for itself” in one fell swoop.
• To select the right plan, it is important to itemize all home systems over two years of age, itemize all appliances and identify all that are eight years or older or which are costly to repair, and then do general pricing on the costs to replace or repair anything that seems at risk. If the warranty option subtracted from the expected costs for repair or replacement is too high for comfort, it is a wise idea to invest in the plan.

DIY considerations

• DIY repairs can help save money, and lots of homeowners are adept at effecting repairs that might also be part of a home warranty. However, they will never be capable of all of the repairs, and counting on qualified and pre-screened service contractors is far more comforting than hoping a DIY repair can last.

References

• Craftsman Estimator Costbook, complete series year 2019.
• Latest prices found on Home Depot and other vendor Web sites.
• Literature review of DIY Web sites.