A home warranty plan can save you money because it will cover the cost of home appliance or system repairs. The plan itself usually costs between $400 and $600 and the average repair of a fridge, for example, can get up to $400. Looking at these numbers, investing in a warranty makes sense because it will cover more than the fridge. However, you’ll get to enjoy these benefits only if the plan you choose is good and reliable. This means that you need to learn what to consider and what to watch out for in order to choose a home warranty plan that’s actually useful.
Types of Home Warranty Plans
An important thing you should understand is that all home warranty plans are, in essence, the same. They offer coverage in case an appliance or some structural home system (electrical wiring, heating, plumbing, etc.) breaks down. It’s similar to how your home insurance covers your home in case it gets structurally damaged by the elements. But the warranty will cover only the “insides” of the home and the extent of this coverage will vary.
There are over 180 home warranty companies on the market today and each of these offers at least a couple of plans. For all that their principle is the same, every plan is unique in some way. They usually differ in coverage as well as limits and terms and conditions that, basically, outline exactly how the warranty is applied.
Home warranty plans can be separated into several types”
- Appliance only
- Basic coverage (covers most essential appliances and systems)
- Premium coverage (covers average appliances and systems in a middle-class home)
- Optional coverage (can be used to add specific items to one of the aforementioned plans)
Please note that not all home appliances can be covered with a home warranty. The majority of these plans include:
- Water heaters
- Garbage disposals
Optional coverage is the most varied across the plans. As home warranty companies use it to get a competitive advantage, they strive to include a wide range of items. Therefore, you should be able to find a plan with optional coverage that will protect any expensive part of your home, including a pool, spa, or a garage door. So which are the best home warranty companies in America?
How to Choose the Best Home Warranty Plan
Choose the Best Providers
The first thing you should do when looking for a home warranty is to make a list of all available options. This will be a lot of work as the majority of companies work in multiple states, so you’ll have dozens of choices. However, it’s imperative to look into every option if you want to find the best one.
The good news is that you can narrow down that list significantly without much effort. To do this, you should study a plan comparison and reviews. The comparison must come from an independent source and include all the top warranty providers in your area.
This list won’t be long because the home warranty industry is extremely unbalanced. There are nearly 200 companies across the country, but nearly 80% of the market belongs to the top six. And American Home Shield, one of the oldest players in the industry, holds 42% of the entire market.
Considering all this, plan comparison lists usually have no more than ten options from the top-performing businesses in the area. The majority of those will be industry veterans, so they are quite reliable. However, being around for decades isn’t definitive proof that the company is the best. That’s why you should look at reviews as well.
These will give you a better idea of the true value of the plan. Both professional reviews from independent sources and testimonials from customers shared on online forums, present a realistic outlook on the strengths and weaknesses of every option. They can draw your attention to important details that make the difference between the plan saving or wasting your money
For example, AHS might be the biggest company with millions of customers. However, it also has thousands of negative reviews and complaints about unexpected fees and payment delays. When you take this into account, going for a plan from a smaller provider with a better reputation in your particular area will be the wiser choice.
Choose the Right Kind of Plan
After you shortlist reliable providers, you can start choosing which plan will suit your needs best. Consider the age and state of your home and appliances when making this decision. For example, if the house is old but you’ve recently upgraded your devices, you would benefit from an appliance only plan. This is because even if you choose a plan that covers structural systems, like plumbing, the warranty provider might deny your claim citing “prior damage”.
This is one of the most common reasons for claim denials and also the reason why buying a home warranty plan to cover old systems or appliances isn’t worth it. These plans serve best to protect your new investments and upgrades.
The exception is a home warranty plan for home buyers. The buyers need the security that this protection implies. Therefore, if you plan to sell your home soon and want to use the warranty to increase the price, you should look for a plan with the most extensive coverage.
When choosing the plan, you should also consider its details beyond the exact coverage. The most important of those are:
- Limits. What is the exact payout limit of the plan? What are the payment terms? Many plans that aren’t very good will have small limits, which means you won’t save any real money with the warranty.
- Terms and Conditions. What exactly does the contract say? Take your time to study the fine print for loopholes that can help the provider wiggle out of payments.
In Conclusion: Choose the Home Warranty Plan That’s Right for You
Home warranty plans vary greatly and not all of them are good. However, there are quite a few trustworthy and flexible options as well. The most important thing to consider when choosing the plan is your personal situation. Look for the option that will be best suited to offer maximum benefits in your situation instead of blindly following someone else’s recommendations.