If you have been looking at the value and benefits that a home warranty provides, this guide will help. It will help you decide if having they are worth the financial investment – Let’s get started.
How much does a home warranty cost?
In the US, home warranty coverage is surprisingly affordable.
Most basic plans cost between $350 to $600 a year, which is about $7 to $12 a week. Comprehensive plans with additional types of coverage cost an additional $100 to $500 per year.
The national average cost for home warranty plans are about $900 per year. For this price, you should expect coverage for your home’s mechanical systems and appliances. You can customise your coverage level, creating a home warranty plan that perfectly suits your home and the items you are concerned about.
Regardless of the plan you choose, there will be a service fee of between $50 to $125 for each claim you make on the warranty. Some policies may have different service fees for specific claims. For example, service fees for an electrician may cost more than a plumber. Other policies allow you to pay a higher annual premium for a lower service fee.
In the UK, as a home warranty is considered more as a “builders insurance” and is a policy that will generally last about 10 years. This is also paid off as a one-off payment. Typically speaking, the cost of a home warranty (structural Defects Insurance) costs 0.5 – 1.5%
Inevitably, it always pays to shop around and find a policy that has that perfectly matches your coverage requirements and budget.
Benefits of home warranty
While a UK home warranty is mandatory, if you are unsure as to whether or not you should look into this in America, here are a few of the key benefits of having one:
- It makes repairing items around your home simple
If you have a home warranty, it becomes very simple to repair broken appliances and mechanical systems around the home. All you have to do is call the home warranty provider.They will send the appropriate tradesman over to your home at a time that is convenient to you. You won’t have to make multiple phone calls or perform research to find the right tradesman for the job.
- You will be more financially stable
A home warranty helps you avoid unexpected financial shocks. For example, you might have your hot water system and electrical systems malfunction within the space of a few days. These issues might cost thousands of dollars to fix. If you have a home warranty, you will only have to pay between $100 to $200 in the form of service fees. This helps you to remain financially stable.
- Coverage for any issues that occur in your new home
If you are purchasing a new home, there may be some unexpected issues. The last thing you want after dealing with the expenses of moving to a new house and obtaining a mortgage is a broken water heater! A home warranty will ensure that any unexpected issues with the property can be quickly dealt with.
- Qualified and fully insured tradesman
Each home warranty provider works with hundreds of different tradespeople across the country. They are carefully selected professionals who have the appropriate qualifications and insurance. You won’t have to check the credentials or insurance arrangements of the tradesman that you employ, that has already been done for you.
Can you get a home warranty for free?
If you are buying a home, you may receive a home warranty for free! The most common scenarios for this occurring are:
- The seller has a home warranty policy which is transferred to you
If the seller has active home warranty cover, it can be transferred over to you when you purchase your home. You will receive the amount of coverage that is left on their policy, which will be between 1 and 12 months. The seller will have to contact the home warranty provider to arrange the transfer into your name.
- The seller buys new home warranty cover for you
Some sellers will purchase a new home warranty for the buyer when they sell their home. They often do this to avoid any issues with the home that may occur just after the sale. It also makes the sale a more attractive proposition for the buyer — they can rest assured, knowing that the home appliances and mechanical systems are covered.
- The real estate agency buys a new home warranty for you
Some real estate agents say thank you to the buyer of a home by purchasing a home warranty for them.
To Summarise.. Is a home warranty worth the cost?
In the US, there are a few factors that go into determining if a home warranty is worth the money.
- Do you have appliances or mechanical systems that are a little run down?
If you do, a home warranty is an excellent option. You can rest assured, knowing that old appliances and mechanical systems are covered.
- Do you want to minimise unexpected home maintenance expenses?
When a home appliance of mechanical system suddenly malfunctions, you may have to scramble to find the money necessary to perform the repair. A home warranty removes the risk of very large and unexpected expenses. Instead, you will pay an annual premium and small service fee.
- Do you want to streamline the repair process?
Purchasing a home warranty makes home repairs much simpler. You simply contact the home warranty provider and they take care of everything for you.Of course, there are also some downsides.You may purchase a home warranty and nothing breaks within your home for the next few years!There are also limitations on the kinds of items and repairs that home warranties cover — so it is important to read the fine print.For the UK, as acquiring this type of insurance is mandatory this is simply a case of choosing which insurer would suit your project best.