You’ve graduated from university, landed a good-paying job, your credit score is nothing to shake a stick at, and you even know your debt-to-income ratio—it’s actually good. You
What is a Home Warranty?
Dated: October 7 2019
But what is a home warranty, and is it worth the cost?
What is a Home Warranty?
A home warranty, which is different from homeowner’s insurance, is a package designed to protect your bank account if appliances or systems in your newly purchased home break down due to normal wear-and-tear.
How Does a Home Warranty Work?
You pay a fee each year to maintain your home warranty. It averages between $400 and $600 a year, but your cost will vary based on the coverage the warranty provides.
If something that’s covered under your plan breaks, you call the home warranty company. The warranty company contacts a local technician who comes to check things out, and you pay a “trade call fee.” (Generally, it’s up to the contractor to set a price for the trade call fee, but your warranty may put a cap on the amount a contractor can charge you.)
The contractor then gets in touch with your home warranty company to let them know how much parts and labor will cost to repair the issue or replace the appliance, and your warranty company gives the contractor the green light. They’ll coordinate the appointment and let you know when the technician will be out.
Is a Home Warranty Worth the Cost?
Not all home warranties are created equal. Some offer far more coverage than others do, so make sure you read the fine print and know what you’re getting into before you mail a check.
If you’re handy and good with appliances, a home warranty may be a waste of money for you—but if you’re busy and can’t tell the difference between an Allen wrench and a flathead screwdriver, it might be a good investment.
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Chip is the IT Manager for Alex MacWilliam Real Estate. He handles the technology needs of the company as well as helping agents in their day to day problem solving.....
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