What is a Home Warranty?
Home warranties protect appliances and major components of a home in the event they break down from normal wear and tear. As the homeowner, you pay a monthly or yearly fee in order to keep your policy active, just as you would for insurance. However, home warranties differ from homeowner’s insurance due to the fact that insurance is mandatory and covers damage to your home and theft of your personal belongings. With a warranty, only specific items are covered for replacement or repair, and only for a preset amount of time.
Home Warranty Coverage
Not all home warranty policies offer the same coverage which is why it’s important to carefully consider each of your options. From basic 1-year warranties to those that last for years and offer more coverage, the details can make all the difference in what the policy covers. Some of the most common items covered include:
- Lighting Fixtures
- Smoke Alarms
- Water Heater
- Garage Door Opener
- Trash Compactor
- Garbage Disposal
- Built-in Microwave
- Ceiling Fan
- Central Vacuum
You can learn more about the specific items and systems within the home that are covered by reading through each policy that’s offered. Generally, no two policies are ever the same, so looking at the details is important before you sign up for yours. This is especially true if you’re on a tight budget and can’t afford to replace things like your air conditioning system or your high-end oven if they were to break down.
The companies that offer the very best warranties tend to be those that want to surpass the needs and expectations of their customers. To do so, they offer coverage for some of the most used systems in the home, such as the oven, a/c, plumbing, and roofing. However, these companies may not be suitable for customers who have more needs than everyday homeowners. For these types of situations, premium home warranty plans will be necessary. These will cover bigger systems, such as plumbing, electric, air, and even heating in addition to appliances.
What about customers who only have very basic needs? There are companies that will cater to these needs with basic plans that only cover home appliances and none of the major systems. With several different companies to choose from and a variety of warranties, you’re not limited in your options. You can take your time searching around to find a warranty that offers the coverage you need for the systems or appliances that you know you won’t be able to easily replace or repair on your own.
Home Warranty Costs
Home warranties are generally affordable and worth paying for because they offer so much coverage. However, not all policies are the same price. Some are relatively affordable while others can be quite expensive. For example, the home warranty cost can range from $50 to $250 while others can exceed $1,000 or even $2,000. On average, most homeowners will spend around $600 per year on a warranty for items within their home. Why do the prices for these policies vary so wildly? There are many reasons, including:
The state that the warranty is providing coverage in is one of the biggest factors that will impact pricing. For example, California, Florida, and Washington tend to have the lowest prices when it comes to home warranties. On the opposite side of this, Connecticut, Rhode Island, New Hampshire, and New York have some of the highest prices when it comes to home warranty prices. However, Alaska has the highest premiums of all for these policies when compared to other states. The difference in price is the result of the weather, the year-round temperatures, and the risk of disaster.
House Type and House Size
Not all houses are created equally, which is why home warranties cost more for homes that are larger than they do for those that are smaller. Condos and townhouses tend to have the most affordable premiums while fourplexes have the most expensive premiums for home warranties. Single families have the second least expensive premiums while duplexes and triplexes will cost more. However, it’s important to keep in mind that fourplexes, triplexes, and duplexes tend to be shared by more than one family, which can help reduce the cost per person.
Age of Home
New construction homes see significantly lower prices when it comes to home warranty premiums because they are less likely to experience claims. Even with a lack of pre-existing conditions due to not being lived in before, consumers should still consider investing in a warranty just in case something does go wrong.
Older homes, even if they are well-maintained, will have premiums that are around 40% more expensive simply because they are more of a risk to the warranty company.
One of the best things about warranty coverage is that the policy owner has the ability to choose which exact plan they pay for. Those that cover appliances only are some of the most affordable and generally run around $450 per year. Those that cover only systems within the home are a bit more expensive and will run around $480 per year. The most expensive plans are those that cover both systems in the home and appliances, and these can range from basic to comprehensive depending on the specific coverage that the homeowner wants. By taking a look at different options, it can be easy for homeowners to compare prices and find the right policy for them.
Details of the Home
When homes are very complex or have upgrades, the home warranty company will want to know as much as they can about it. Unfortunately, this can mean a higher premium for each and every question that the warranty company asks. The more they want to know, the more the price will likely be. On average, one or fewer questions will result in the lowest premiums of around $480, 2-3 questions will result in a premium of around $630, and four or more questions will increase the price to around $730+ per year.
Although the yearly premium is an important consideration for the homeowner, they’ll also need to decide what their deductible will be. These can range from low to high, depending on what they are aiming for when it comes to the monthly payment. Lower deductibles will result in higher monthly payments while higher deductibles will result in lower monthly payments. This is very similar to how insurance pricing works so most homeowners will be able to easily determine which choice is right for their budget.
Length of Term
How long would you like to have coverage for? The price for your policy may vary depending on this information. With some companies, monthly policies are cheaper, while with others, yearly policies are cheaper. Prices can also differ depending on how you pay. For example, some companies will charge less if you pay in full for a year rather than pay monthly. However, this isn’t always the standard, and the details do vary from company to company.
Top 5 Home Warranties to Consider
Select Home Warranty
Homeowners can choose from three different types of home warranty plans, depending on what they would like coverage for. Depending on your budget and the type of systems and appliances you have, you’ll be able to see which is right for you. The three warranty options are detailed below.
- With this plan, coverage goes up to $500 for ductwork, refrigerator, stove, clothes dryer/washer, garbage disposal, range, oven, built-in microwave, and dishwasher.
- This plan covers up to $500 for cooling systems, water heaters, plumbing and electrical. However, air conditioning, ductwork, and heating systems are covered up to $2,000.
- With this plan, coverage up to $500 is offered for ductwork, clothes washer/dryer, dishwasher, plumbing, stoppages, built-in microwave, electrical, ceiling fan, garage door opener, oven, fridge, range, cooktop, and garbage disposal. However, A/C, heating, cooling, and water heaters are covered up to $2,000.
Choice Home Warranty
This home warranty company also offers two different plans, which are detailed below.
- This plan covers up to $500 for ductwork, stoppages, heating system, water heater, range, stove, cooktop, oven, garbage disposal, garage door opener, electrical, built-in microwave, exhaust fans, plumbing, clothes washer/dryer, and Whirlpool bathtubs.
- This plan expands on the basic plan, offering additional coverage (up to $500) for plumbing, ductwork, stove, cooktop, stoppages, range, oven, garbage disposal, electrical, garage door opener, built-in microwave, dishwasher, clothes washer/dryer, Whirlpool bathtub, exhaust fans, ceiling fan, refrigerator, water heater, heating system, and air conditioning.
Total Home Protection
There are two different plans available from this company, both of which offer desirable coverage for homeowners. You can learn more about these plans below.
- This plan offers coverage (up to $400) for ceiling fans and exhaust fans. Coverage increases up to $500 for plumbing, water heater, garage door opener, trash compactor, garbage disposal, dishwasher, built-in microwave, cooktop, range, oven, ductwork, electrical, Whirlpool bathtub, and stoppages.
- This plan offers up to $500 of coverage for exhaust and ceiling fans, garage door opener, trash compactor, garbage disposal, dishwasher, built-in microwave, stove, cooktop, range, plumbing, air conditioning, stoppages, Whirlpool bathtub, heating system, refrigerator, electrical, clothes washer/dryer, ductwork, oven, and water heater.
Pride Home Warranty
This company offers comprehensive plans that can either replace or repair the most important systems and appliances within your home.
- The platinum plan covers ceiling and exhaust fans, garage door opener, ductwork, garbage disposal, built-in microwave, dishwasher, cooktop, oven, range, stove, Whirlpool bathtub, water heater, plumbing stoppage, plumbing system, electrical system, and heating system.
- Platinum Plus
- This plan covers everything the platinum plan does in addition to your a/c system, refrigerator, and clothes washer/dryer.
- Additional Options
- Homeowners can choose to add on coverage (for an additional fee) for septic systems, stand-alone freezer, limited roof leaks, refrigerator ice maker, second fridge, sump pump, spa, central vacuum, water softener, well pump, and pool/spa.
Endurance Home Warranty
This company offers several plans to help homeowners coverage exactly what they want to protect within their home. You can learn more about these below.
- System Coverage
- This protects plumbing stoppages, water heater, heating system, plumbing system, electrical system, a/c, and ductwork.
- Appliance Coverage
- This plan protects clothes washer, clothes dryer, dishwasher, cooktop, garbage disposal, refrigerator, built-in microwave, and stove/oven.
- Endurance Coverage
- This plan is a bit more extensive and offers a warranty on ceiling fans, electrical system, a/c, garage door opener, ductwork, clothes dryer, dishwasher, cooktop, built-in microwave, stove, refrigerator, plumbing system, garbage disposal, water heater, heating system, clothes washer, and plumbing stoppage.
- Additional Options
- For homeowners who need additional coverage, they can find it by adding these items to their plan for an additional fee. Additional a/c system, stand-alone freezer, additional central heating system, in-ground spa, additional water heater, septic system, central vacuum, salt water pool/spa, second refrigerator, in-ground pool/spa, limited roof leak, plumbing and lighting fixtures, wine fridge, lawn sprinkler system, sump pump, water softener, and whole house humidifier.
Which Home Warranty Company Should You Sign With?
With so many home warranty companies to choose from, it can be difficult to select the one that will meet your needs. With the five listed above, you can’t go wrong. Each has plans that are affordable and offer coverage that can help cover just about any system or appliance you have in your home. In addition to this, each company has great reviews from customers and provide reliable customer service when they’re needed the most.
While you may be tempted to only look at the price when you’re selecting your warranty, this shouldn’t be your only consideration. You should also consider the coverage offered and any additions you can add that might help further protect systems and appliances within your house. With something as important as a warranty, the last thing you want is a plan that won’t help you when you need it to help pay for something that has stopped working like normal.