Appliance repairs are expensive. Fixing your washing machine may cost as much as $450, and replacing complex parts, such as refrigerator compressors, may run up to $1,250, according to home-services website Angi. A home warranty could offset those expenses, but it’s important to understand what it includes and whether purchasing one makes sense for you.
A home warranty is a service contract that covers the cost of repairing and replacing major appliances that have been damaged by wear and tear. Some contracts also cover your plumbing, electrical, and heating, ventilation and air conditioning (HVAC) systems. These costs aren’t typically covered by homeowners insurance, which pays for damage to your home’s structure or your personal property. Premiums vary, ranging from $25 to $150 a month, depending on the level of coverage, says Viktoriya Cully, director of underwriting, warranty and specialty risk at AmTrust Financial.
In addition to the premium, you can expect to pay what’s known as a trade service call fee, which is a fixed charge you incur every time you request a service call. This fee, which is similar to an insurance deductible, averages $75.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Should you buy a home warranty?
A home warranty may be beneficial if the manufacturer’s warranties on most of your appliances have expired or you have older appliances that break down often, says Robert Washington, a real estate broker with Savvy Buyers Realty in St. Petersburg, Fla. However, if you have a newly built home or brand-new appliances that are still under the manufacturer’s warranty, a home warranty probably isn’t worthwhile. You should also consider whether you’re better off putting the money you would spend on premiums in an emergency fund, which would earn interest and be available for other expenses, too.
Because home warranty providers send service technicians to you, you won’t have to worry about finding someone to make repairs. That can be a drawback, however, if you’re not happy with your provider’s technicians. In addition, warranty companies often impose limits on the amount they will pay for repairs and replacements, so you may end up with a lower-quality appliance than you would buy on your own.
If you decide that purchasing a home warranty may be worthwhile, you can search for providers and check customer reviews on the websites of the Better Business Bureau, Angi, BestCompany and Trustpilot.
Most contracts require you to wait 30 days from the time you obtain the warranty before filing a claim. This measure is designed to prevent customers from filing a claim for a preexisting problem. When you file a claim, the warranty company will typically send a technician within two days to diagnose the problem. If it’s a minor issue, the technician will usually fix your appliance on the spot. If more work is required, you’ll have to schedule follow-up visits, and you’ll be charged a service fee for each one.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related content
-
A Comfortable Retirement is About More Than MoneyWhen it comes to a happy retirement, money can’t buy these things.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It HelpsSaving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
Noctourism: The New Travel Trend For Your Next Trip"Noctourism" is a new trend of building travel and vacations around events and plans that take place at night. Take a look at some inspiring noctourism ideas.
-
Eight Tricks to Shop for Glasses if You're Over 50Shopping for glasses often gets trickier — and more expensive — as you age. If you've over 50, take these steps when you set out to buy a new pair.
-
My First $1 Million: Electric Utility Executive, 56, South CarolinaEver wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
Ask the Editor, October 3: Tax Questions on the Charitable DeductionAsk the Editor In this week's Ask the Editor Q&A, we answer reader questions on the charitable deduction.
-
How to Turn Amazon Prime Day Into a Travel WindfallDuring Amazon's Prime Big Deal Days sale, skip the fluff — here’s how to extract real travel value via gear, services and strategic credit cards.
-
Need a Reason to Retire Early? Consider These Eye-Opening StatsThe majority of people retire early, leaving the workforce before reaching their Full Retirement Age (FRA). Maybe you should, too.
