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The Pros and Cons of a Home Warranty

A home warranty offers several advantages; however, there are some downsides to purchasing a warranty. Follow these tips to make the right choice for you.

The Pros and Cons of a Home Warranty

Pro: Flat Rate Fixes Can Help You Save Money

If you are a new homeowner, you and your real estate agent have to rely on the home inspection team to report on the condition of the kitchen appliances, washer and dryer, and water heater, among other things. But even a highly recommended home inspector could miss issues that lead to costly repairs. With a home warranty, you can save a lot of money by taking advantage of flat-rate fixes.

With flat-rate fixes, your service provider makes repairs or replacements for a predetermined amount of money. If your policy says you only need to pay $100 for repairs, your warranty will help when you need someone to do a job that costs several hundred or thousands of dollars.

Con: You Could Get More Coverage Than You Need

A home warranty is a service contract but has some features similar to insurance. The most obvious similarity is that you only get your money's worth when you need to use your policy. 

If you never need repair services during the contract, you might think buying a warranty is a waste of money. Most warranties only cost $300 to $500 per year; you will need to decide if you are willing to risk losing a little money. 

Pro: Peace of Mind 

A home warranty can provide peace of mind by offering protection against unexpected repair or replacement costs for certain appliances and systems in your home. This can be especially valuable for homeowners on a fixed budget or those concerned about the potential cost of repairs or replacements. Many people think it is worth the risk. Losing $300 probably will not ruin your household budget, so you are taking a small gamble to protect yourself from serious financial loss.  A home warranty can provide added peace of mind by offering protection against the cost of repairing or replacing certain appliances and systems in the home. This can be especially valuable for homeowners concerned about the potential financial burden of unexpected repair or replacement costs.

Con: The Policy Must Belong to the Homeowner 

Home warranties always belong to the homeowner, and a warranty will not protect you from loss if you rent a home. Unfortunately, renters do not usually have the financial flexibility of those who can afford to purchase homes. When you sign a lease, read the fine print regarding the replacement of your appliances and the HVAC due to normal wear and usage.

Pro: Coverage for older appliances 

Home warranties often cover appliances and systems beyond their manufacturer's warranty period. This can be especially useful for homeowners with older appliances, as these may be more likely to break down or need repair. Additionally, home warranties can provide convenience to homeowners by handling the process of finding a qualified service provider to perform repairs or replacements. This can save homeowners the time and effort of independently researching and contacting service providers.

Con: Most Home Warranties Exclude Some Repairs 

Home warranties rarely cover acts of nature or God. If your home floods or a tree crashes through your roof, your warranty is unlikely to cover those repairs. Unfortunately, these are some of the costliest repairs you could need for your house. 

Pro: Multiple coverage plans available 

 A home warranty can help homeowners budget for home maintenance and repairs by providing a predictable annual cost for coverage. This can be especially useful for homeowners on a fixed budget or who do not have the financial resources to pay for unexpected repair or replacement costs. Home warranties come in various plans, allowing homeowners to choose the level of coverage that best meets their needs and budget.

Con: You Must Choose Between Certain Repair Companies 

Home warranty companies often form relationships with home repair businesses — developing contracts with repair professionals can help keep costs down for the company that owns your home warranty. This arrangement creates a situation similar to health insurance (or even homeowners insurance): You must stay within the network if you want to save the most money. 

While saving money is beneficial, some people do not like losing control over who they have performing the repairs. When you are stuck choosing from a short list of contractors, you may discover that you do not want to use any of them. You can avoid this problem by researching the warranty company's contractors ahead of time; if you do not like the list, you should reconsider buying the warranty. 

Pro: Increased Home Value

A home warranty can increase value by reassuring potential buyers that they will not be responsible for certain repair or replacement costs.

Con: Warranties May Cover Repairs Instead of Replacements 

Contractors want to spend as little time and money on your home as possible, so they may choose to repair problems instead of replacing damaged items such as air conditioners and electrical systems. Since repairs do not always last as long as replacements, you could face more expenses in the near future. 


In conclusion, a home warranty can be a useful tool for homeowners who want added protection against the cost of repairing or replacing certain home appliances and systems. However, it is important to carefully consider a home warranty's cost, coverage, and limitations before deciding whether it is the right choice for you. There are many downsides to buying a home warranty, but the potential savings encourage many homeowners to purchase them. Getting a warranty is a bit of a gamble, so you will have to decide whether it makes sense to spend a few hundred dollars each year — the average cost of a home warranty — to avoid higher repair costs.

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