Are Home Warranties a Good Money-Saving Idea?

When you purchase a home, you have several insurance options available to you. Homeowners insurance protects your home against external damage, structural faults, weather phenomena etc. Home warranty insurance protects the systems and appliances in your home. Your decision to pay for home warranty coverage is an important one that could save you a bundle of money. However, before you rush off and purchase a home warranty plan, several factors should be considered:

  • If your house is brand-new, and the appliances and systems are brand-new, you do not need home warranty coverage for at least the first year. Remember that you will be covered by builder’s insurance for your first year. Plus, you invariably have a warranty from the manufacturers of your appliances.
  • If your appliances are approaching the 4-year mark, chances are that they are susceptible to failure. Anything older than 4 years old requires home warranty coverage. The older your appliances get, the greater the likelihood that they will need to be repaired or replaced.
  • Look at the condition of your home. Is everything in pristine order, or is there evidence of disrepair? If you see the paint peeling off your walls, or water leaking from your pipes, or systems making sounds that they should not be making, chances are you will be needing to do some repair work soon. Unfortunately, old appliances may preclude you from being covered by home warranty plans. Even if you managed to secure a home warranty plan for old appliances, your request for service may result in a denial and you will be out of pocket to the tune of $50 – $120 (the deductible) depending on your home warranty provider.

How Much Do New Appliances Typically Cost?

According to Statista, the general trend between 2009 – 2016 has been a steady increase in the value of imports of household and kitchen appliances. In 2009, US households spent $17.13 billion importing these appliances, and by 2016, that figure had risen to $26.91 billion. Consumer Reports data indicates similar trends of rising expenditure on household appliances. In terms of personal consumption expenditure of household appliances, the 2016 figure amounted to $54.749 billion according to the US Bureau of economic analysis. Leading consumer websites indicate the following average costs vis-à-vis appliances:

  • The average cost of installing an appliance is $185
  • The average cost of repairing an appliance is $173
  • The average cost of refinishing an appliance is $379

These figures say nothing of the costs of the appliance itself. Typically, top-mounted freezers range from $350 – $600, while bottom-mounted refrigerators range from $800 – $1,200. A basic range can cost $350 while stainless steel models like convection ovens can cost $2,000 +. Induction heating prices start at around $2500, and are ideal for professional chefs. Dishwashers are relatively inexpensive at $250 on the low end, but the costlier products can set you back $600 – $1,000. Here’s another humdinger: the costs of repair work on appliances ranges between $85 on the low end and $300. But that doesn’t take the expensive appliances into account.

How Can a Home Warranty Plan Save You Money?

For starters, home warranty plans offer coverage on a variety of systems and appliances in your home. Basic plans are affordable, but they may offer limited coverage. Full coverage plans (add-ons) will cover more systems and appliances in your home. For example, Jacuzzis, swimming pool motors, garage doors, refrigerators, dishwashers, garbage disposals, washers and dryers, and other home systems need to be factored into the equation.

Since the costs of replacing these items can routinely run into thousands of dollars, it behooves you to at least consider an affordable home warranty plan to cover any eventualities that crop up with these systems. It is far better to have coverage and not need it, than to need coverage and not have it. A great resource for evaluating different types of home warranty plans is . They provide extensive analysis of various providers and the plans they offer. You can evaluate the coverage, the deductible, and make comparisons with other home warranty providers.