Home warranties often feel like an extra grab for homebuyers’ hard-earned money as they juggle mortgage rates and home offers. Nevertheless, millions of homeowners find the protections offered by reputable home warranty companies to be worth the investment. 

A home warranty can help alleviate concerns for first-time buyers, homeowners with limited DIY skills and homeowners of older homes. However, a homeowner should be aware that a home warranty doesn’t cover every issue and is different for every policy.

Peace of Mind 

Whether you are buying a new home or need to protect the investment in the one you already have, a home warranty provides peace of mind. For a small monthly or yearly premium and a service call fee that is typically less than the cost of a repair or replacement, you can rest assured that your home systems and appliances are covered. 

Many new homeowners will negotiate with the seller to include a home warranty as part of the sale agreement. If they can't, they are usually able to purchase one for their own use during the closing process or within 30 days of moving in to avoid the typical waiting period. 

A home warranty offers protection against unexpected expensive repairs and replacement costs that can wreak havoc on a budget or force a homeowner to dip into their emergency savings. While a homeowner may miss out on some interest earned by investing the annual premium into an emergency fund, millions of homeowners find that their home warranty investments more than pay for themselves in terms of peace of mind. 

Predictable Budgeting 

Many new homeowners are surprised to learn that a home warranty costs an annual premium and a service call fee, similar to homeowner's insurance. However, a home warranty can help offset the cost of unexpected repairs. 

The cost of a home warranty can be less expensive than the repair or replacement costs for the covered appliances and systems. Additionally, some home warranties cover items that aren't usually covered by homeowners' insurance. 

Newly built homes generally come with a builder's warranty, so it may not be necessary for homeowners to purchase a home warranty. However, when it comes to older homes or resale homes, homeowners may be better off with a home warranty. 

Before deciding on a home warranty, homeowners should carefully review the contract and understand the coverage options, exclusions and dollar limits per repair or item. It's also a good idea to compare quotes from multiple providers. A reputable home warranty company will be transparent and will describe their terms clearly in

their contracts. 

Convenience 

Home warranties are a great convenience for homeowners who need to cover unexpected repairs or replacements on their appliances or systems. Unlike insurance plans that have hidden costs like deductibles and fees, home warranty services provide flat-rate fixes for a one-time fee. 

When something breaks, all you need to do is call the service provider and they will send someone to fix it quickly. Home warranties are also customizable to meet your specific needs, so you only pay for the coverage options that you need. 

After paying earnest money, mortgage broker fees and closing costs on your new home, the last thing you want is to pay for expensive repairs out of pocket. That’s why a home warranty is a good investment for buyers and sellers alike. 

Reliability 

Home warranties from reputable companies do offer value for homeowners, especially when the home appliances and systems break down. The annual premiums and service call fees that go along with these policies can add up, but they can save you thousands of dollars when compared to paying for repairs out of pocket. 

Whether or not you have a home warranty plan, it is a good idea to put money aside for product repair and replacement in a rainy day fund. Consumer Reports recommends setting up a savings account dedicated to this purpose that can earn interest and be easily accessible in an emergency. 

If you are wondering, “Does home warranty cover appliances?” You will be pleasantly surprised that most home warranties do cover kitchen and home appliances. There are some situations a home warranty won't cover, such as fire or water damage (that's what homeowners insurance is for). Home warranties may also have limitations on coverage for replacements. For example, if a homeowner needs a new refrigerator and the model has been discontinued, the warranty may only cover the cost of a similar appliance. Be sure to read the specifics on your own warranty.