Having a home warranty policy takes away much of the financial and mental stress that comes with maintaining your home. For an average annual cost ranging from $300 to $600, you can avoid sinking significant cash into upcoming (and at times unexpected) repairs. As a matter of fact, it’s not uncommon for home warranties to cover over $20,000 in maintenance, repair, and replacement costs.
If your current policy is up for renewal, take time to assess if it’s still giving you the best value for your money. You might discover the need to add upgrades or make the switch to a new provider that addresses your needs more comprehensively. Before you automatically extend your warranty for another year, consider the following factors again.
Age of your home
Are the washer and dryer showing noticeable signs of wear? Has it been a while since the ventilation system was last serviced? Can you guarantee that your home’s electrical wiring is up to current code?
It’s no surprise: older homes require more maintenance. There’s a higher chance that their systems and appliances will need to be serviced thoroughly or replaced outright. This means more maintenance costs, which makes extending a home warranty almost always a good idea for an older home.
Even if your home is not showing any outward signs of disrepair, go ahead and form a list of repairs you can expect soon. Base your list on your home inspection report. By clarifying the schedule of maintenance for your home, you make the decision to maintain your policy for another year more straightforward.
For owners of newer homes, the decision process for extending an existing home warranty is slightly different. More focus should be placed on weighing the cost of an extension against having to dip into your emergency reserves for repairs. However, you should still be planning for repairs to properly estimate how your finances will be affected.
Your personal finances
Even though home warranties are renewed every year, they are paid monthly, making one a part of your monthly budget for home-related expenses. With this in mind, the average basic annual policy can then cost you between $25 to $50 per month on top of the mortgage, home insurance, and other bills.
In addition to the annual cost, home warranty companies also charge a service fee for each call you make. This fee ranges from $50 to $100, depending on your policy and the repair. To find out exactly what fees and deductibles apply to your situation, review your current contract. It’s possible that, despite these additional costs, renewing for another year will be more beneficial to you than the risk of out-of-pocket expenses.
Your current policy
While a home warranty is useful, its effectiveness might have diminished because of a change in your circumstances. Since these changes are sometimes uncontrollable, reviewing the details of your current policy a few weeks or months before its renewal is a good rule of thumb.
Check how much of your coverage still applies to your situation. Pay particular attention to the limits set on different types of maintenance and repairs as well as the cost for each one. See which parts of the policy you can upgrade to make it more comprehensive. These add-ons can cost up to an additional $500 but add significant value. Common additions include septic tank and sump pump repair, secondary appliance coverage, pest control services, and rekeying services for doors.
While reviewing and upgrading your policy, take care not to overlap the coverage with the kind your home insurance policy already provides. That’s money better spent elsewhere or added to your emergency fund.
During your review process, compare your current policy with plans from other home warranty companies. Read sample contracts to check if policies that appear better really are.
Before you decide to switch to another provider, talk to your current one first. They may already have a comparable plan or can help you customize one that better suits your home. If extending with your provider won’t yield the same benefits, you can at least rest assured that your decision was well-informed.
Why an extension is worth the cost
Getting a home warranty from a reputable provider and renewing it regularly protects you, whether it covers one major, costly replacement or several routine repairs. Coupled with home insurance, a home warranty has the potential to save you a great deal on home maintenance, reducing your financial risk by sharing the cost and task of maintaining your home with an invested third party.
For additional advice on homeowners warranty insurance, home selling, and home buying in Pierce or King County, feel free to get in touch with me, Lori Lewandowski. Call 253.617.5922 today or send me an email at lorilewandowski(at)gmail(dotted)com.