(Editor’s note: Many apartment dwellers plan to buy a home at some point in their lives. When you own a home, repairs are unavoidable. In today’s article we look at how a home warranty plan can help a homeowner save money.)
Written by Guest Author
When you live frugally, you need to manage the resources you have with extreme care and to invest in services that can help you save them in the future. Home warranty plans are one of such services. Which can protect homeowners in case any of their appliances or home systems break down. This kind of coverage can be very useful because it can save you from paying a huge repair bill. However, if you don’t choose the plan carefully, you might end up wasting your money. In order to avoid this, you need to understand what exactly makes a home warranty plan beneficial and how to choose a provider you can trust.
How a Home Warranty Plan Can Benefit Frugal Homeowners
In order to spend your money wisely, you should understand that there are several types of home warranty plans, but all of them work similar in principle. You can think of this plan as an extended version of a manufacturer’s warranty you get every time you buy a brand-new appliance. However, a home warranty will cover several appliances and home systems (heating, plumbing, roofing, etc.). The exact coverage is determined by the plan and many providers offer optional coverage as well, so customers can customize their plans to fit them personally.
Also, unlike the manufacturer’s warranty, the home warranty coverage extends beyond the breakdown caused by the item’s innate defects. If the plan you choose is good, you will be covered regardless of the exact reason for the breakdown.
The owner saves money using a home warranty when one of the covered items breaks down and they don’t have to pay for the repairs because the warranty provider does it. This can be a huge help because it helps you avoid unexpected expenses. Even if the plan doesn’t cover the full repair cost, it should cut the amount down significantly.
The fact that home warranties are indeed useful is proven by the rapid growth of this industry. Today it’s valued at over $2 billion and growing by 3.1% a year. These plans are most popular among home sellers and buyers, because this kind of protection helps put one’s mind at ease during the transition of home ownership. However, as a frugal homeowner, you can also benefit from it greatly because you get a chance to avoid repair bills that exceed $1,000 at the cost of a single policy, which is around $400-600 a year.
When a Home Warranty Fails to Save You Money
Home warranty plans, for all their usefulness, sometimes turn into a complete waste of money. This happens when the plan you buy isn’t any good. However, you should understand that warranty providers will try to hide this fact in order to get to your money.
To avoid being scammed like this, you should look out for:
? Low coverage limits.
Every home warranty plan will have a maximum payout limit either per item repair or per plan. If this limit is low, say $150, it will be useless for expensive repairs, which are the reason you buy this coverage in the first place.
? High fee per service call.
One of the perks of using a home warranty company is that it’s your one point-of-contact for all repairs of covered appliances and systems. This means that in case of a breakdown, you only put a call to the home warranty provider and they search for a repair contractor and send them your way. However, you are charged a set service fee per call. The size of this fee usually ranges from $50 to $75 but some companies make it so high that the majority of minor appliance repairs would cost you less.
? Tricky Terms and Conditions.
The majority of dishonest home warranty providers cheat you out of your money through the fine print in the contract’s Terms and Conditions. Therefore, you need to study each clause carefully to understand exactly when the provider can deny your claim.
Home Warranty Providers You Can Trust
Home Warranty of America (HWA)
HWA offer high limit coverage, which makes it stand out as one of th4e best providers in the industry. The company also gets a lot of praise for high-quality contractors and efficient and quick service. The company is trustworthy and accredited with the Better Business Bureau. Also, it covers nearly all of the US, which is a definite sign or reliability.
This kind of coverage comes at the price of higher than average premiums, but with the high limits, this provider offers excellent value for money. It also has one of the best and most honest terms and conditions in the industry.
First American Home Warranty (FAHW)
FAHW is the second biggest home warranty provider in the US. It’s renowned as a dependable market veteran that has very low costs for optional coverage. The biggest advantage of this particular company is its trustworthiness, which is proven by the fact that it’s not only accredited with the BBB. It also has a B+ rating, which is extraordinary for his industry.
The downside of FAHW is that it only has a very limited selection of plans. The optional coverage feature allows making these plans more flexible.
2-10 Home Warranty
2-10 Home Warranty is the more progressive of all providers and has some rather interesting coverage options. It’s also a market veteran with a wide presence in the majority of states. It has an even better A rating with the BBB and a history of very satisfied clients.
This company is very popular with home buyers, in particular, and has plans designed for them specifically. It’s now also one of the few companies to offer extensive structural coverage.
Home Warranties for Frugal Homeowners: Conclusion
In order to save money with a home warranty plan, you need to make sure that the plan you choose has no loopholes or limits that will make it useless. When you find a plan like this, you will be able to cut the costs of ant big home appliance and system repairs and save hundreds of dollars.
But never forget that there are about 200 home warranty companies on the market today and this number is growing. Some of these are outright scams and some simply aren’t good enough to be of any true help.
That’s why you should take your time studying the options and researching the companies’ reputations. Don’t fall for the lowest premiums or some other “special perks” and always research the plan and provider thoroughly before purchasing it.
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Image by Nattanan Kanchanaprat from Pixabay
