Home warranty renewal?

September 14, 2006 5:21 AM

Ned Flanders was right. Insurance is a form of gambling. Please help me win the bet with my home warranty.

My initial one-year home buyer's warranty expires tomorrow and I'm trying to decide if it's worth renewing. The renewal cost for one year is $415. The home was built in 1984, and my biggest worry is the heating/cooling system. We are still using the original furnace and heat pump. What is the typical lifespan of these systems in a Midwestern (central Ohio) climate? The warranty also covers plumbing, water heater, electrical systems and appliances. Is it worth it for a 22-year-old house?

posted by Otis to Home & Garden (6 answers total)

Read your warranty carefully. Many times they don't cover HVAC systems. So if your AC goes, you're still left with shelling out $2000 for a new one, and your warranty is worthless.
Most consumer advisors tell people that you're better off saving the money you would have spent on a home warranty and self-insuring rather than shelling out the money every year. Check Clark Howard's Web site on this topic.
In my experience, also, you always have to pay a trip fee anyway. It's never ever totally free after you pay the warranty premium.
As for your question about the lifespan of HVAC, I don't know about Ohio... here in GA, where we run the AC 24/7 for much of the year, you're lucky to get 15 years out of a system.
posted by FergieBelle at 5:37 AM on September 14, 2006

Buy an AEG washer and dryer. My home insurance pays out around $400 annually to get them repaired. I pay $10 a month. I'm not really that happy about the situation, but at least I'm getting my money's worth on home insurance.

Also, my program has a cap on single-repair costs: $1000. So even though my furnace would be covered, it's only covered to $1000. And not for wear-and-tear issues, only sudden failures. Wich for a decent furnace will never happen. I suggest breaking something else.
posted by GuyZero at 6:30 AM on September 14, 2006

In general, never buy insurace for planned expenses. This includes items that will eventually succumb to wear and tear. "Self-insuring" for those events (or a better way to put it is: being financially responsible for them) is a clear winner - financially - in the long run.
posted by Imperfect at 11:07 AM on September 14, 2006

If you're adverse to self-insuring, you might call some local repair shops and ask them what sort of service contracts they offer, for the sake of comparison shopping. I know several landlords of short and long term properties who have them for their HVAC systems but I am sure some homeowners buy them as well.

You might get better rates buying these kinds of assurances straight from the service providers.
posted by phearlez at 12:50 PM on September 14, 2006

I just wanted to add this: today my home inspector told me that the furnace in the home I'm buying is twenty years old and that in this area I could expect it to last at most five more years. I live in the Chicago suburbs. Hopefully this will be a good anecdotal point for you.
posted by sugarfish at 8:52 PM on September 15, 2006

Response by poster: Thanks for the input everyone.
posted by Otis at 2:37 PM on September 16, 2006