The first time you had a refrigerator shut down, a dishwasher break, or an HVAC unit fail, you were probably shocked by how expensive it was to repair or replace your appliance. If you're lucky, you invested in an extended warranty or home warranty that helped to defray some of the costs.
While most of us rely on home appliances to make our lives easier, hefty repair and replacement costs can be frustrating and overwhelming if you don't have warranty coverage and have to pay out-of-pocket when damage occurs. With many options available like extended warranties, home warranties, and homeowners insurance, it's difficult to compare the coverage details and determine which insurance option best suites your needs.
You might be asking yourself questions like “What do home warranties cover, anyway?” or “What is the best home warranty company?” Let’s take a look at what a home warranty covers, some things to consider if you opt for a home warranty, and what the best home warranty companies offer.
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A home warranty offers protection for systems and appliances in your home for a given period of time, generally around one year. Some examples of relevant appliances and systems include stoves, dishwashers, refrigerators, plumbing, and electrical systems.
While a home warranty may be useful for all homeowners, it’s particularly beneficial for people who live in homes that have older systems and appliances. You’ve probably heard the saying, “When it rains, it pours.” This is especially true with outdated appliances and home systems. The older your systems and appliances are, the more expensive it can be to find parts and companies that have expertise to repair them.
The last thing you need is for your larger appliance items, such as your air conditioning unit, refrigerator, and dishwasher to all fail or need repairs at the same time. This is where home warranties come in to help cover the cost of repairs or replacements.
Although they are sometimes used interchangeably, home warranties and homeowners insurance are two very different things. It’s important to know the difference to ensure you have the coverage you need in case of disaster.
Homeowners insurance offers financial protection for incidents such as injuries occurring on your property, damage from some types of natural disasters, and other property damage. While this is a wide umbrella of coverage, there are some voids in homeowners insurance coverage that require the need for a home warranty.
Home warranties offer coverage for significant investments that contribute to your home functioning smoothly, like service and repair or replacement of your home's major systems and appliances. Home warranties can provide a buffer when these systems begin to fail - think electrical, plumbing, and HVAC. A home warranty is issued by a home warranty company, and generally only provides coverage for one year.
A home warranty typically covers items in two categories: home systems and large home appliances. However, it’s important to carefully read the fine print of your warranty to ensure you have the coverage you think you’re paying for. In some cases, you may need to pay extra fees for additional items you want coverage for, such as pool pumps or septic tanks. You'll also want to pay close attention to the deductible required should you need to file a claim. Here are the two categories that home warranties typically cover:
Home systems
Let's take a look at five well-known home warranty companies and what they offer.
Home Warranty Inc.
Home Warranty Inc. offers home warranty coverage for around $479 per year, with a payout cap of $15,000 per year. With Home Warranty Inc, you can choose your own repair technician, and you’ll typically experience quick response times.
ARW Home
ARW Home was rated as the home warranty company with the lowest service fees by Forbes. ARW Home offers home warranties in 46 states, has an A+ rating from the Better Business Bureau, and has a flat $55 service fee across any plan and for any claim.
Liberty Home Guard
Liberty Home Guard is known for having excellent customer ratings and offers simple coverage options. While Liberty Home Guard’s flat service fee of $60 is slightly higher than that of ARW Home, Liberty Home Guard offers three affordable plan options for home system coverage, home appliance coverage, and a plan that covers both.
First Premier Home Warranty
First Premier Home Warranty is rated by Investopedia as the home warranty company with the best customer response time. While many home warranty companies can take as long as 3 days to respond to claims, First Premier Home Warranty is known for responding in as quickly as 20 minutes. This can be critical depending on the extend of the damage you're experiencing.
AFC Home Club
AFC Home Club offers affordable plans across every state, with the exception of Hawaii. Unlike most home warranty companies, AFC Home Club offers warranties of up to 3 years, with many different types of plans and customizable benefits.
Investing in a home warranty is an important way to avoid substantial costs when your appliances and home systems begin to fail. However, it usually only provides coverage for a year, the deductibles can been steep when you do file a claim, and it can take a while to get your claim resolved (and your home back in working order). Having a home warranty will help minimize out-of-pocket costs and prepare you for when the unexpected happens, but an extended warranty goes beyond that to ensure you get maximum value and life out of your purchases.
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