Should I Buy a Home Warranty?
You’re buying a house.
Someone asks:
“Do you want a home warranty?”
And you think:
“I don’t know. Am I supposed to?”
The answer isn’t automatically yes or no.
A home warranty is a separate product from homeowners insurance, and whether it makes sense depends on the home, the coverage and your comfort level.
First: A Home Warranty Is Not Homeowners Insurance
This is important.
Homeowners insurance generally protects against certain covered losses and risks described in the insurance policy.
A home warranty is a service contract that may provide repair or replacement coverage for certain household systems or appliances, subject to the contract’s terms, exclusions, limits and service fees.
They are not the same thing.
What Might a Home Warranty Cover?
Depending on the company and plan, a warranty may cover certain items such as:
- HVAC systems
- Plumbing systems
- Electrical systems
- Water heaters
- Certain appliances
But don’t assume every plan covers every item.
And don’t assume a covered item will automatically be replaced.
Read the contract.
What Might It Cost?
Depending on the provider and plan, you may pay:
- An annual or recurring premium
- A service fee when you request service
- Potential additional charges depending on the situation
Costs and coverage vary.
Compare the actual contract, not just the sales pitch.
What Does “Covered” Actually Mean?
This is where you need to pay attention.
A warranty may have:
- Coverage limits
- Exclusions
- Service fees
- Waiting periods
- Maintenance requirements
- Pre-existing condition provisions
- Restrictions on what will be repaired or replaced
So when someone says:
“Your HVAC is covered!”
The next question should be:
“Under what circumstances?”
Read the Fine Print
I know.
Nobody wants to read a giant warranty contract.
But if you’re paying for protection, you should understand what you’re buying.
Look for:
What is covered?
What is excluded?
What is the service fee?
Are there coverage limits?
Who chooses the repair company?
What happens if something cannot be repaired?
Does the company replace the item, or does it have other options under the contract?
Does a Newer Home Need One?
Maybe.
Maybe not.
A newer home may have newer systems or manufacturer warranties that already provide some protection.
An older home may have aging systems that make additional coverage appealing to some buyers.
But age alone shouldn’t make the decision for you.
Look at the actual condition of the home.
Does an Older Home Need One?
Again, maybe.
If you’re buying an older house with aging mechanical systems, you may feel more comfortable having a service contract.
But don’t use a warranty as an excuse to ignore the condition of the property.
A home warranty is not a substitute for a home inspection.
Should the Seller Provide One?
Sometimes buyers request that a seller provide a home warranty as part of the transaction.
Whether that’s appropriate depends on the circumstances and what is being negotiated.
It may be offered by the seller, purchased by the buyer or not included at all.
Don’t Buy It Because Someone Scared You
This is important.
If someone tells you:
“You better buy this because your furnace is going to die.”
Stop.
That’s not a reason to purchase a warranty.
Understand the actual condition of the system.
Understand the warranty.
Understand the cost.
Then make your decision.
Ask Yourself These Questions
Before purchasing a home warranty, ask:
- What exactly does this plan cover?
- What doesn’t it cover?
- What is the service fee?
- Are there coverage limits?
- Are there exclusions for age or condition?
- Are pre-existing conditions excluded?
- Who chooses the contractor?
- What happens if a system cannot be repaired?
- Are manufacturer warranties already in place?
- Is the cost worth the protection to me?
The Bottom Line
A home warranty can provide value for some homeowners.
It may not be worth the cost for others.
Don’t buy one simply because you think you’re supposed to.
Understand the contract.
Understand the limitations.
Understand what you already have covered.
Then make the decision that makes sense for you.
Note: Home warranty coverage varies significantly by provider and contract. This page is educational and is not a recommendation for or against purchasing a home warranty.
Have a Question?
Buying a home comes with a lot of questions. You don’t have to figure everything out on your own.
Have a question about something you read here? Want to talk through your situation? Or just not sure what your next step should be?
I’m happy to help.
Schedule a Time to Talk With Karyn
No pressure. No obligation. Just straight answers.
Prefer to just send me a question?