(ThySistas.com) HomeServe is a well-established, leading example of a home warranty company. To start with the basics, they offer warranties to both appliances and home systems in exchange for a monthly premium. This means that if your AC unit breaks down or the refrigerator needs to be replaced, they will do it (up to a limit of $1,500).
The deductibles range from $75 to $125, but essentially, if just one system or expensive appliance breaks down during the year, you’re likely to make your money back. The premiums can add up to around $500 per year depending on the package, but considering the cost of many systems (i.e. the internal electrical system) then HomeServe will essentially attend as many service calls as you need, providing it doesn’t exceed the $1,500 annual limit.
Insurance and warranty companies do not operate on making losses. Of course, the true benefit of paying a monthly premium isn’t because it ends up cheaper for you. It can, and it certainly does for many (particularly those with old, dodgy appliances prone to breaking). But generally, the average person will likely spend slightly more in the long run – the house usually wins.
Their true value comes from knowing exactly how much you’re paying and damage limitation. Essentially, you want to avoid being in the position where an expensive system breaks down and you have to pay $4000 for a replacement – hence emptying your savings account.
However, some people fancy themselves as DIY experts and refuse to pay for warranties because they’re confident in fixing issues themselves. So, who are home warranties actually for?
Time is of the essence – who is suitable to home warranties?
A big factor in whether or not a home warranty is worth it is time. This is actually the main factor that goes under the radar. We may fancy ourselves as a bit of a DIY expert, but do we have the time?
Generally, it tends to be single moms who have the least amount of time – and even parents in general. One survey found parents to have only 32 minutes of free time each day. Although there are few credible studies about single moms and free time, this number certainly isn’t going to increase.
Having a phone number for a professional, knowing that a technician nearby will be able to attend to the issue immediately, is a huge weight off parents’ shoulders. Having to search the internet for solutions, understand and learn the techniques, then have a go and risk further damage… It certainly isn’t something most of us have time for.
Many homeowners outright cannot do DIY, too, through a lack of experience. Whilst it is great to practice, usually it’s very small-scale practice that is sensible, not trying to mend expensive appliances.
Well known issues with home warranties
Over the past few years, home warranties have not had the best press. There have been many truthful horror stories. For example, AC fix claims have been rejected in the past for being too old.
There is never a more important time to choose a good company than when paying for insurance, or particularly home warranties. The one thing you want is reassurance that they will protect you – that is literally their only purpose.
In order to choose the correct company, you can use their Better Business Bureau record as an initial indicator. This is the advice of many media outlets too, but if we dig a little deeper, the BBB ratings cannot be taken completely at face value either. They have been accused of “pay to play”, where companies essentially buy their ratings.
So what can you trust? Well, the only thing left really is to crowdsource customer experiences and see the empirical results of the company, and to try it for yourself.
There should be extensive research done online about the company before handing them over your money. This can be done through online reviews and online complaints. In the HomeServe example from earlier, a more detailed review can be found, and then compared to other companies.
You essentially want the companies that have low chances of claim denials, reasonable premiums, 24/7 customer service and a reasonable deductibles & limits.
Once you have whittled it down to just a few companies, you can usually pay for monthly rolling contracts with them. This way, you can experiment with a few companies throughout the year and see which company has the best service for you personally – as that is all that matters.
Staff Writer; Carla Moore