How to Select a Home Warranty That Fits Your Needs

A home warranty is a helpful way to protect one of the largest investments most people will make in their lives. Unlike home insurance—which covers your home in the event of fires or floods, for example—a home warranty can cover appliances or systems in a house when they are in need of replacement or repair. 

Having home warranty protection can save you hundreds or even thousands of dollars, but not every homeowner will have the same needs. Understanding the types of warranties available, and how they align with your individual situation, will help you select the home warranty that best fits your needs.

Types of Home Warranties

When comparing the options available from most companies, there are three primary types of home warranty coverage plans:

• Systems plans — Covers whole-house systems such as HVAC, electrical, and plumbing.
• Appliances plans — Covers home appliances like refrigerators, dishwashers, ovens, and more.
• Combination plans — Covers both systems and appliances.

Most companies will also offer supplemental coverage for additional fees to cover things like pools or outdoor kitchens. As with home insurance and other warranty types, a home warranty might not cover everything without these add-ons and you may need to meet certain requirements for coverage, like following the manufacturer’s recommended maintenance schedule.

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Which Type of Warranty Do I Need?

Several factors should be considered when deciding between home warranty types to better ensure you’re getting optimal protection at the best rate. The top questions to ask yourself should be:

• How old is the home? A new home will typically include new appliances, which are more likely to be covered by a manufacturer’s warranty—sometimes for several years. If your home is new, a systems plan might provide all the coverage you need. However, an older home might have systems or appliances that are more likely to break down. With an older house, a combination plan might be your best option to avoid future repair costs from piling up.
• Are you a first-time homebuyer? Buying a home requires a lot of upfront costs and can be a stressful, though rewarding, process for many first-time buyers. Purchasing a home warranty can provide a safety net and help reduce potential headaches down the road. If you’re in this situation, having an emergency fund for home repair and proper budgeting of any future remodels will help you determine what kind of warranty you want to invest in.
• Are you planning to sell? Most home warranties can be transferred to new owners upon selling and offering one to a potential buyer is a great way to sweeten the deal. These protections can also help you avoid unexpected repairs while preparing to bring the home to market. Assuming your home systems have been repaired, renovated or determined to be in good condition as part of your home sale preparations, look toward appliances plans to heed off surprise repair bills.
• What is your budget? Most home warranties cost around $50/month, with service fees ranging from $75-$150, on average. If your budget is tight, a financial strategy that cuts out these added costs might be considered, but keep in mind, a broken HVAC can cost homeowners thousands of dollars. 

Home Warranty Companies

The final step of selecting your home warranty is to understand the plans available from different home warranty companies and selecting plan that best suits your individual needs. 

Speak with neighbors or check out online reviews to learn more about the different companies and their pros and cons. 

Some of the questions you should ask include:

• Do they have any exclusions or limitations to their coverage?
• What is their average turnaround time if a repair is needed?
• Is a home inspection necessary?
• Will there be a charge for repeat visits? 
• What is the termination policy?

Modernize can also connect you with local contractors to help you inventory the status of systems and appliances in your home — which is especially important for owners of older homes — before you connect with a warranty provider to better understand your current and potential needs.

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Next Steps

The pros at Modernize can work with you to understand your needs and expectations and quickly connect you with a trusted home warranty provider in your area. Remember, a home warranty can help you protect your investment and save you money and headaches in the long term.