October 25, 2024

Are Home Warranties Worth It? A Homeowner’s Guide to Home Warranty Coverage

Author: Jim Mullery, President of Old Republic Home Protection

For 78% of Americans, homeownership is still the American dream. Homebuyers spend months searching for the perfect house and many even drain their emergency fund to come up with a downpayment. A house is still the greatest financial investment most people will make in their lifetime, so it’s important to protect your investment—and your savings—with a home warranty.

Should I Buy a Home Warranty?

More than half of U.S. homeowners live paycheck to paycheck and the last thing they should worry about are costly repairs and replacements of their home systems and appliances. According to Bankrate.com, 56% of American households have less than $1,000 in savings for emergencies.

A home warranty gives you protection from unplanned and costly failures, with the potential to save you thousands of dollars when covered systems or appliances fail.

Can you comfortably afford to replace your HVAC or electrical systems? If not, then the right home warranty can provide the budget protection you need.

How Do Home Warranties Work?

When a covered home system or appliance breaks down due to normal wear and use, simply contact the home warranty company, pay the trade call fee (TCF), and a service provider will come to your home to diagnose and repair the problem.

Is a Home Warranty Different from Homeowners Insurance?

Homeowners insurance is an essential part of responsible homeownership. Your homeowners insurance may protect your home from catastrophes like fires, falling trees, or flooding. However, it won’t replace a worn-out water heater or repair leaky plumbing. That’s why home warranty coverage is so valuable—it offers unique protection for items not covered under typical homeowner’s insurance policies.

Homeowners Insurance Vs. Home Warranty

Would you dream of skipping homeowners insurance just to save money on your premium payments? Of course not. It’s far too risky. Skipping home warranty coverage can be just as risky!

Did you know that less than 6% of homeowners file a claim against their homeowners insurance policy each year? However, 81% of homeowners face unexpected home repairs just in their first year of ownership! While homeowners insurance offers invaluable coverage against major catastrophes, home warranties provide peace of mind and budget protection for items homeowners rely on day-to-day.

What Role Does the NHSCA Have?

The National Home Service Contract Association is the home warranty industry association. It provides stability and assurance that member organizations are operating at high standards and are held accountable. Member companies spent over $1.7 billion in claim payments in 2023 and continue to serve millions of homeowners each month.

Home warranties are definitely a wise investment offering budget protection and safeguard against inflation.