Everyone dreams to own a home someday, and while this is a valid investment and aspiration to have, many may not know that managing a home involves a lot of maintenance and this can sometimes be quite cost-intensive. This is where a home warranty comes in. In this article, we expand on the average home warranty cost as well as some very useful tips to help you in the selection of your home warranty.
But firstly, what is a home warranty?
A home warranty in a way works like insurance. It is an annual service contract covering the costs of the inevitable replacements and repairs of home appliances and other components of a home system. Home warranties help you save costs and prevent you from breaking your budget on home appliance repairs and maintenance. It is a smart way to manage your finances. Some examples of appliances and systems covered include refrigerators, dishwashers, washing machines, plumbing systems, heating and cooling systems among others.
Today, there are so many companies that offer home warranty coverage. A challenge that is today faced by warranty-seeking homeowners is getting the best value for their money given all the options available. It is therefore important to consider factors such as the type of plan, the coverage spread, size of your home, state of your appliances and systems, among other factors. Putting all this into perspective will help in the decision-making process.
So how much do home warranties cost?
These costs do not always come in one lump sum, they usually consist of a home warranty contract premium cost, service fees, and sometimes an enrollment fee as well. It is important to consider all of the cumulative costs in order to make a well-informed decision.
Please note that these costs vary across different companies. See below the industry average cost range of the different fees:
Warranty Plan: This usually costs $25 – $50 for a monthly premium or $300 – $804 for the yearly option depending on the company.
Service Fees: This is a fee that is required by all warranty companies for services rendered by the service technicians when a claim is made. This charge is not refundable and is usually within the range of $75 – $125, depending on the company. For example, if in a year, five claims are made and the cost per claim is $100, this will take the total service charge for that year to $500.
Enrollment Fees: Although not always required, depending on the provider this is a one-time fee that is paid before the commencement of contract service. Some companies also offer a free first month for this fee within the contract.
At the end of the day, it is always advisable for homeowners to conduct their own extensive research by looking through reviews of the different policies under consideration as well as placing the fees side by side to their budget. A general rule of thumb is that the warranty should not cost more than what it will cost to carry out the repairs without a warranty.