Are home warranties worth it?

December 17, 2006 7:22 AM

Does anyone have an opinion on home warranties?

I know I had one when I first bought my house. That lasted for one year. I did not renew.

In the past year I had a two leaks in my plumbing. I'm assuming this would have been covered in a home warranty. The plumber was not cheap and was definitely more expensive than the one year of warranty from American Home Warranty ($444/year).

Do most people have home warranties? Is it worth the price? On a handiness scale of 10, I would rate myself a 6.

posted by zzztimbo to home & garden (12 comments total)

That might be a bad assumption. I've had home warranties (provided by the builder) on all 3 of my homes. I've never had anything go wrong that I could claim against the warranty. They are loaded with exclusions for all the things that is likely to fail in your home systems.

I wouldn't bother. Put your money into regular maintenance and upkeep of house and you'll be better off.
posted by COD at 7:37 AM on December 17, 2006

We've owned two houses, and had home warranties on both. I'm certain that it's not the best deal in insurance, but it's paid off in both cases for us. We had heating/cooling problems in our current house that included several parts that would have easily been more $$ than the warranty.

We also like the freedom of a copay, and having someone look at whatever we need.
posted by griffey at 7:51 AM on December 17, 2006

Look around. The home warranty we have is good for systems (plumbing, electricity, appliances) but utterly irrelevant to the fact that my FREAKING ROOF IS LEAKING...ahem.

If you're interested, I'd shop around and see whether there are any out there that will serve your purposes.
posted by Emperor SnooKloze at 7:53 AM on December 17, 2006

I've never considered having a home warranty on a house I was just living in. I've bought and sold a lot of houses, and home warranties were always presented to me by real estate agents as something the sellers could get to make the home more saleable--a guarantee to the buyer that they wouldn't be hit with certain maintenance costs in the first year of ownership.
posted by not that girl at 8:31 AM on December 17, 2006

In the aggregate, most warranties are losers for the consumer, winners for the insurance company; otherwise the companies would not continue to offer them. The real value in a home warranty is that you don't have to shell out all at once if, for example, your furnace croaks. Over time, though, you'll probably end up paying more for the warranty than you would for the repairs. And, as others have said, you have to watch for exclusions.

If you've got a decent "rainy day" fund, I would pass on the warranty.
posted by jknecht at 8:37 AM on December 17, 2006

We had a home warrenty (AON was the company) when we moved into our 120 year old house. I can't say i was too pleased with it. I think we attempted 3-4 claims, and got only one covered (a furnace issue). And the company made it hard on us, and even harder on the woman at the heating oil company who had to deal with them, to get it set up and paid for.

One of the attempted claims, a broken refrigerator in the upstairs kitchen (the house was once split into apartments), went as far as a guy who they chose coming out to look at it, making an estimate, then the company saying that it wasn't covered because it wasn't the primary kitchen (which we'd told them when we put in the claim.) In the end, I got them to reimburse us for the copay we gave the contractor, but that was after a bout of he said/she said.

My impression is that the claims people's jobs mostly revolve around making it near impossible to use the damn policy.

I think the main purpose of such policies is making an older house seem a safer investment to prospective buyers (it had that effect on us).
posted by jessicak at 8:39 AM on December 17, 2006

We have had a home warranty with American Home Shield for three years. I keep renewing it for two reasons: we end up having a plumber out three or four times a year, and that alone makes the $400-$500 warranty premium worth it. Also, the peace of mind that comes with knowing I won't have to shell out thousands for a new furnace or A/C if it breaks is great. I have been very happy with AHS service and with the quality of their contractors. I recommend a home warranty for all my friends who are buying their first houses. I think the value of a home warranty comes down to the quality of the warranty company you go through and your own tolerance for financial risk.
posted by gokart4xmas at 9:18 AM on December 17, 2006

usually, it's an insurance scam. in real estate transactions, the buyer often asks for 1 year warranty, which costs the seller some 300-500 extra dollars. but when something goes wrong, it's seldom get covered.
i always recommend sellers i represent to refuse the request and the buyer usually accepts it.
posted by growabrain at 10:18 AM on December 17, 2006

Well, we've gone ahead and gotten the home warranty for a year in each house we've bought. By way of disclaimer, twice the realtor picked up the cost, and once we made the seller buy it. In the first house, the warranty was worthwhile because for one thing we had claims that were covered. It was a 50 year old house with a 20 year old heater and ten year old appliances. You do the math.

The other advantage of the home warranty was that they had a list of local, reputable contractors. Being new to the area, I was more than willing to call them and say "Look, I am not making a claim, but if I were to need a [insert type of handyman], who would I call?" I also think it's likely that the insurance folks have some sort of priority deal with the contractors. So if you have an air conditioner go out in July, you might end up higher on the waiting list.

In summary: for a newer house, don't bother or make someone else pay; older house, seriously consider it but still better if you can make someone else pay; new to region, remember you can use them to screen contractors. Be sure you read and understand your coverage, as others have pointed out that they follow the fine print very very closely.
posted by ilsa at 11:33 AM on December 17, 2006

The business of insurance is defined as agreeing to cover losses generally and then, step by step over decades, identifying those occurrences which are likely to give rise to claims and redefining the policy language to exclude them. At the endpoint, the perfect policy will clearly exclude every possible source of losses.
posted by megatherium at 12:30 PM on December 17, 2006

I've owned 12 houses. When selling, I like to offer a warranty. When buying, I appreciate it if there is one.

For the first year after a sale, I think it's a good idea. It has paid off twice for me.

As a matter of fact, for my current house, the DAY BEFORE CLOSING, the water heater blew and had to be replaced. I did not get (but asked for) a warranty on this house, but 24 hours earlier in closing, and I would have had 3 examples.

There is a lot of stuff to go wrong in a house. Deferred maintenance is the rule in a lot of houses, and if you are buying, I'd highly recommend one. You can't catch everything on an inspection. Like anything else, get a policy that doesn't have a lot of exclusions for year 1, even if it costs a little more.
posted by FauxScot at 4:38 PM on December 17, 2006

We're on our second year of warranty with American Home Shield. It's around $500, and that includes our whirlpool tub. I've only had to use it a couple of times, and it paid for itself the first time. It also covers our appliances, some of which were in the house when we bought it, some we bought ourselves. All covered.

I don't get warranties on electronics and things like that, but on a house, definitely. And on a car. There're just too many things that could go wrong and end up costing more than we have in savings. For us, it's a small price for a little extra piece of mind.
posted by thir13en at 10:42 AM on December 23, 2006