Are Home Warranties Really Worth The Money?

For most people, buying a home is the largest investment they will ever make in their lifetime. And any home is going to need repairs in the future. It is just basic common sense then you need insurance to help cover many major problems that could possibly cost thousands of dollars to repair or replace.

A home warranty does just that, by covering the cost of a breakdown of the major home appliances and system components that most frequently cause a major expense.

The cost for a warranty is relatively minimal -- averaging around $500.00 a year -- and covers the repair or replacement of home systems such as plumbing and heating and major appliances.

For an extra fee, you can also add air conditioning, pools, and other components to the basic policy.

Local repair companies are employed by the warranty company for servicing. The homeowner contacts the warranty company, who sends a repairman to the home. Providing the repair or replacement is covered by the contract, the homeowner only pays for the service visit, which averages around $75.00.

Though a one-year home warranty is frequently offered free to homebuyers as part of a sale, many homeowners often decide to renew their policies once their contract expires. Most do so for the sake of convenience, and are hoping to minimize repair or replacement costs on aging household systems -- or simply want to avoid the hassle of having to track down repair technicians on their own..

In general, then, a home warranty would seem an inexpensive means for a home buyer to acquire peace of mind.

But are such policies truly worth it?

While many have found them to be valuable, others offer more negative views, and claim to have experienced difficulty in scheduling service calls - or in getting aging systems repaired or replaced.

Among other complaints are exclusions in service contracts, in which preexisting problems, or breakdowns resulting from poor maintenance or improper installation, were not covered...

In some cases, before repairs would be authorized, buyers were told they would need to upgrade their systems to current building code standards.

Commonly companies will favor repair over replacement, even when, homeowners claim, the cost of a replacement was clearly justified.

Experiences using home warranties vary greatly, however, with many satisfied customers claiming to have saved hundreds, sometimes thousands, of dollars in repair costs a year.

Truthfully, purchasing a home warranty would probably best make sense in the first year you own a home, when money tends to be tight and reserve funds for maintenance are low.

You might also want to consider it if your home systems are old and you're willing to settle for repairs even if a warranty company refuses to authorize a replacement.

Whatever you do, before deciding whether or not to purchase a home warranty, be sure and read the service contract carefully to see what is and isn't covered. Check carefully for exclusions.

Compare the premium and coverage terms and check the company's track record using trade organizations such as Better Business Bureau. Also research the company online for any negative reviews. The insurance discussion board in scam.com provides a list of complaints against many home warranty companies as does. http://www.ripoffreport.com.