Approximately half of all American adults do not have an emergency fund.
When unexpected expenses arise for people without one, they often turn to their credit cards or high-interest loans to cover these expenses.
If you don’t have an emergency fund and fear that you might encounter unexpected bills, you can protect yourself in other ways. One great idea is purchasing a home warranty.
Having a home warranty helps you cover the costs of repairs to vital parts of your home, and it enables you to protect your finances.
As you start thinking about purchasing a home warranty, you should know seven key things before buying one.
1. Understand What a Home Warranty Covers
Before purchasing a home warranty, you must understand what it covers. A home warranty is a service plan designed to protect specific parts of a home. A typical plan might cover these items:
- Kitchen appliances, such as refrigerator, stove, and dishwasher
- Washing machine and dryer
- Hot water heater
- HVAC system
Additionally, you can add coverage for extra items you own.
When you have a home warranty and experience a problem with a covered item, you will not have to pay the full repair bill to fix it.
2. Make the Right Choices When Purchasing a Home Warranty
One highlight of a home warranty is your ability to choose what your plan covers. You can have a basic plan that covers the things listed on a company’s basic plan or can customize your plan.
For example, if your home has a hot tub or swimming pool, you can add these items to your plan. If you only want your policy to protect your kitchen appliances or your HVAC system, you can choose coverage for those items only.
Some companies also allow you to add protection for more significant parts of your home, such as the plumbing or electrical systems.
You get to choose what your plan protects, and you should choose wisely.
3. Find Out the Differences Between a Home Warranty and Homeowner’s Insurance
You might wonder why you should purchase a home warranty if you already have homeowner’s insurance. These two plans offer coverage for your home and things in it, but they protect different things.
Home warranty coverage is for specific items, as listed above. Homeowner’s insurance protects your house and belongings.
Homeowner’s insurance doesn’t help you if you experience a problem with an appliance or system. It only protects you if a covered peril damages your home.
Having both policies covers all the gaps by protecting everything you own.
4. Learn About the Costs
The next thing to do is find out about the costs of a home warranty. Home warranties typically do not cost a lot, especially for what they offer.
The costs of your plan depend on three things:
- The company you choose
- The types of systems and items you have coverage on
- The age and condition of the systems
If your home is brand-new and has new systems in it, you will likely pay less for a home warranty. Home warranties tend to cost more for homes with old systems and appliances.
The average plan costs between $300 to $600 for one year. You can request quotes from companies to find out how much a policy would cost for your home.
Another thing to evaluate when choosing a plan is the costs for services. A home warranty offers discount services when you need them, but you may still have to pay a fee.
Most companies charge a standard fee for a home visit when you need repairs. You might also have to pay for some of the other costs for the services. It’s helpful to find this out before purchasing a plan.
5. Research Plans Before Choosing One
Spending time researching companies before choosing a plan is well worth the time spent. When you examine your options, you might discover bad reviews for some companies, and you’ll want to avoid the worst home warranty companies.
You should look for a company with excellent reviews and ratings. You can trust a select home warranty company that has positive reviews, and you’ll know that you have a solid plan in place if you choose this type of company.
6. Understand the Benefits of Having a Home Warranty
Now that you understand the basic features and costs of a home warranty, you’ll need to decide, “are home warranties worth it?” To make this decision, take a look at some of the benefits they offer:
You Call One Company for Repairs
A home warranty offers convenience when something in your home breaks. You won’t have to look for a specific contractor to hire.
Instead, you call the home warranty company for help. They choose a contractor and send them to your home.
You Receive Discounted Repair Bills
The second benefit is that you receive discounted repair bills. Instead of spending hundreds of dollars on fixing an appliance, you might pay under $100 for the services.
You Get Replacements for Your Covered Items
Most home warranties offer replacements for covered items. If the technician cannot fix the item, they will provide a replacement device for you.
You Can Have Peace of Mind
A home warranty also provides peace of mind, knowing that you will never experience a massive repair bill you cannot afford.
7. Know-How a Home Warranty Protects Your Budget
Are you still asking, “should I buy a home warranty?” If so, look at one more essential benefit. Having a home warranty makes repair expenses predictable for your budget.
You’ll pay the one-year fee for the warranty upfront, and you can figure this amount into your budget. After that, you will not have to worry about massive unexpected repair bills, so your budget will be safe.
Find Out More About Home Warranties
Purchasing a home warranty is a smart move for most people. It is especially important for people who do not have emergency funds.
Before you buy a home warranty, it might be helpful to research your options and various companies. After that, you can choose the right plan for your needs.
Check out our blog to learn more about your options with home warranties.