Coulda, Shoulda, Woulda Saved Money

Coulda, Shoulda, Woulda Saved Money

Hindsight is 20/20, right? I could have saved over $2,000 with a home warranty this past year.

If you are a homeowner and have been living in your home for several years, as I am, you may not have thought about investing in a home warranty, even if you had one when you first bought the home. I highly recommend you give it some consideration. Here’s why.

Just like people, houses don’t get any younger with age. The major systems (e.g. plumbing and electrical) and appliances start to wear out, even if you take good care of them. If you’re lucky, they don’t all fail at once, so you can absorb the costs of repair or replacement a little bit at a time. Purchasing a home warranty before things break down, can potentially save you quite a bit of money.

A home warranty is an annual service contract that covers the cost to repair or replace parts of home appliances and systems that break down over time. 

It is essentially an insurance policy, and like other insurance policies, they vary as to what is covered and how much they cost. The information I’m going to give you here is generalized, so if you decide to purchase a warranty, be sure that you carefully compare the coverages, particularly their limitations and exclusions.

Most warranty companies offer different levels of coverage at varying monthly fees, starting at around $35/month ($420/year). I might note that the websites I checked require you to request a quote before they show you their available plans. In part, this is because not every company serves all geographical areas (but mostly, I suspect, they just want your contact info).

I recently purchased coverage for my own home, which is a 1924 bungalow. I’m not going to name the company I chose, but one reason I chose them is because they don’t require inspection or maintenance records in order to purchase a plan or get service. This means that when my 10-year-old washer goes out, I will call the warranty company and pay them an additional service fee of $75-$125 (depending on the plan I chose) to send a service person to my home to assess the problem.

If they can’t repair the covered item, they will replace it or offer an alternative solution at no additional cost.

Ironically, in a conversation with my sister a few months ago, she mentioned that she expects that her furnace will go out in the next year or so. I suggested that she buy a home warranty so that she will be covered if/when it does fail. (Note: the warranty company may require a 30-day waiting period before coverage kicks in, otherwise people might wait to buy coverage until an appliance fails.)

Why it didn’t occur to me to take my own advice, I couldn’t say. Sure enough, last year I had to replace my water heater, my refrigerator and my chest freezer, which cost me close to $2,800. If I had invested in the home warranty at $35/m and $75/service call, I would have saved over $2,000! (Don’t think I’m not kicking myself.)

The moral of the story is, learn from my mistakes. If you have an older home/appliances, and can afford the extra $35/mo, give a home warranty serious consideration.

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