Home warranties are as often hyped as a savior for homeowners as a waste of money. Home warranties do come with a price tag, and they don’t eliminate your need for homeowners insurance. You should also still acquire mortgage protection insurance. However, there are a number of financial benefits to having a warranty on your home. Continue reading to discover what these advantages are.
Reduced Emergency Fund Need
Home warranties tend to cover a few key pieces of equipment in the home like the hot water heater, refrigerator, dish washer, furnace and air conditioner. These are the most expensive appliances to repair, and they’re the ones you’d struggle the most to live without. Therefore, if you had to repair one or all of them without a warranty, you could put a huge hole in your wallet. In contrast, you could save capital with a home warranty. If you’re paying the premiums on the warranty every month or quarter, you don’t have to put as much money back to cover unexpected expenses in life.
Remember that the cost of replacing an air conditioner or other major appliance could run into the thousands of dollars, since you have to pay for both the appliance and the installation costs.
You’re still on your own when it comes to that broken window, cracked car bumper or emergency dental bill. However, knowing that you only have to cover a few of the emergencies in life instead of all of them means you don’t have to have as much in savings. And if you don’t have much in savings, warranty coverage means you don’t have to charge that large repair bill to your credit card and pay the interest on it later. Additionally, you can avoid taking out emergency loans. In turn, you can create a more financially stable future for yourself.
Long-Term Investment Protection
One of the less obvious financial benefits of a home warranty is how it forces you to protect your investment. For example, most home warranties require you to have the HVAC system inspected and maintained two or more times a year. If you want the roof to be included in the warranty, you have to fix the little holes in the roof and have the gutters maintained. The premiums will typically rise when you’ve filed multiple claims just as they would with auto insurance. That knowledge may push you to clear the dishwasher drain before it floods, damaging both its internal electrical components and your wood floors.
Saves You Capital
A warranty can save you from costly mistakes, too. For example, most warranties require you to go with licensed, qualified plumbers and mechanics. This means you can’t turn to a general handyman business to check out your appliances or systems. You won’t be able to hire the pool man to fix the pool pump’s motor if they aren’t qualified to do so either. Because general handymen typically are not trained in completing advanced repairs, they often do more damage than good. Therefore, having a home warranty prevents you from having to pay more for a professional to repair the damage done by the amateur.
Depending on the warranty company, you may also get a discount on the repair services. This can happen because the repair service is receiving a steady stream of customers from the referrals from the warranty company. You may also get a discount on the purchase of replacement equipment through the same volume discounts. Alternatively, they may offer phone and online support so you can try to solve the problem yourself, saving you from calling out a professional who flips the circuit breaker and hits reset on the furnace. They may give you a discount on emergency service, when you’d pay a premium for that if you were paying out of pocket. For these reasons, you should consider getting a home warranty. You can set yourself up for financial success if you do.