Home Warranties - Are These a Great Deal?
I am frequently asked my opinion on purchasing a home warranty, the expectation being that any repairs are covered by what is typically an annual policy, with annual premiums being nominal in comparison to typical repair costs making the concept very attractive.
Read the policy thoroughly to understand the limitations and inclusions noted in the coverage. Most policies prefer repair over replacement, while some common items specifically are not covered at all. Pools and spas are typical examples that are entirely exempt or coverage is limited to only certain elements. Maybe the garage door opener is covered, but not the springs and other components of the door itself which the contractor will require be replaced when installing a new opener. Be aware of these elements when selecting coverage.
Are there deductibles or caps on coverage. Be aware that a deductible for each occurrence, coupled with a cap on coverage for higher priced items. In some instances, these surcharges with the annual premium equal a total cost of coverage can be prohibitively expensive.
What does the policy dictate in the way of repair versus replacement. Whether it is a minor or major system, all too frequently the customer expectation is replacement, offering a greater degree of ongoing reliability with the latest in efficiency and technology. Conversely these policies typically dictate repair only.
What is the expected response time. Critical systems such as heat, air conditioning, electricity along with household appliances such as refrigerators and freezers are a critical way of life today. Waiting several days for an appointment, or subsequent waits for the arrival of replacement components is not acceptable to most homeowners in this modern age.
Does the party offering the warranty have a financial interest in the placement of this coverage. Some real estate brokerages, title companies and home builders either possess an ownership interest in the insurance provider or receive a commission for referring the customer. These relationships should be disclosed and considered when and if you select a policy.
It has been my experience that when a client purchases this type of coverage, it is typically not renewed on an ongoing basis. Most homeowners ultimately opting to have the freedom to choose the remedy for these instances whether repair versus replacement, base model or enhanced features all from the service provider of their choosing versus having these decisions imposed by the carrier.
-John Barker 425.830.0241 john@johnbarker.net