Home Warranties – A Waste of Money?
When large appliances in your home break, such as a dishwasher or air conditioning system, the cost of repairs can be significant. To help cover these expenses, some people purchase home warranties. These warranties promise to fix or replace appliances, but are they worth the money?
According to Kevin Brasler with Consumers’ Checkbook, home warranties have become a big business. Companies advertise that they will protect homeowners against major repairs, but in reality, they often fall short. Many policies have maximum payment limits that are far lower than the actual cost of repairs. For example, if your furnace dies, the warranty might only cover $1,500, while most furnaces cost $4,000 or more.
Brasler argues that home warranties are a waste of money. They are expensive purchases, typically costing $800 to $1,000 or more per year just for the policy. Additionally, homeowners are required to pay a copay each time repairs are needed. Over time, homeowners end up paying far more in premiums to the warranty company, plus copays for each problem that arises.
One of the biggest issues with home warranties is that homeowners have no control over who does the repair work. According to Brasler, most of the contractors sent by warranty companies are not necessarily the best ones. He explains that top-rated heating and air conditioning contractors, for example, do not want to work with home warranty companies because they find them to be a hassle.
Consumer experts generally advise individuals to read the fine print before signing any contract, and this applies to home warranties as well. It is important to understand the coverage limits, copay requirements, and the reputation of the contractors that the warranty company works with.
Given the potential drawbacks and limitations of home warranties, it is crucial for homeowners to carefully evaluate whether these policies are truly worth the cost. While they may provide some peace of mind, the overall financial benefit may not be as significant as initially advertised.