If your insurance has a $1,000 repair/replacement coverage maximum, you would be responsible for the additional $500. Similarly, if your refrigerator can be repaired but requires a certain compressor motor that your contract does not cover, you may be required to pay for the motor.

Is it worthwhile to purchase a home warranty?

It is possible. Much is dependent on the homeowner. A home warranty is intended to assist in covering unexpected repair costs and provide peace of mind. Purchasing a home is an expensive endeavor, and many new homeowners may not have funds set aside for unexpected or emergency repairs, nor do they have a list of contractors who can assist. That is covered by a home warranty. It can also be useful for those who aren’t extremely handy or who prefer to buy expensive appliances.

Home sellers may benefit from giving a paid home warranty for a set period of time (typically up to a year) to help cover any unexpected difficulties after the sale. While this does not legally shield the seller from disclosure requirements, it does add a sense of goodwill to the sale and gives the buyer certainty that any unforeseen concerns will be resolved.

Are there any disadvantages to purchasing a house warranty?

The majority of home warranty issues stem from disagreements over necessary maintenance and whether or not incorrect maintenance loses coverage. In some circumstances, such as pre-existing components related to heating and plumbing, good maintenance might be difficult to verify, and the gray area of determining how proper maintenance is defined can impede repair approval.

Some house warranties also limit the number of visits per year that are covered. The warranty may also have placed limits on how much money can be spent on a certain repair.

Finally, while having contractors and repair professionals lined up is one of the selling features of a home warranty, homeowners do not choose the contractor. They are required to use the ones specified in the warranty agreement.

Read the fine print

A house warranty might be a smart buy when compared to the cost of repairing certain home systems and equipment. Still, many homeowners may not require extensive repairs for several years and wonder if the expense is worthwhile. If a replacement is required but not covered, a homeowner may wonder why they were paying in the first place.

However, many other homeowners believe that the peace of mind provided by a house warranty is worthwhile. A home warranty can be extremely beneficial, but it is not without flaws. As with any contract, carefully read the fine print. Pose inquiries. Think about it carefully. In the end, any excellent guarantee should benefit you. The reverse is not true.