It doesn't take long as a homeowner to learn how quickly unexpected repairs can spiral and become financially burdensome. The potential risk is why many homeowners consider purchasing a home warranty; however, with many providers and plans boasting tempting offers, it’s easy to lose sight of the factors that'll truly help.
The first time I was presented with a home warranty offer was at the closing table when I bought my first home. The lawyer reminded me I had up to 30 days to opt in before forfeiting the opportunity. This was in 2009. In hindsight, I know it's important to take the time you need. Choosing a home warranty plan should be a thoughtful and informed decision made in conjunction with the understanding that you also have homeowners insurance policy, not one made under pressure or without time to research the options.
"Choosing a home warranty requires the same kind of long-term thinking you’d use when planning energy-efficient upgrades for your home," shares David Steckel, Head of Product and Innovation at Sears Home Services. "Just like better insulation saves you money on heating bills, selecting the right home warranty can protect you from unexpected, costly repairs."
Consider What You Need When Choosing a Home Warranty
- Start by thinking about the age of your home and the condition of its major systems. "Bundling coverage for both major appliances and core systems—like your HVAC, plumbing, electrical, and kitchen appliances—usually makes the most sense in terms of cost-effectiveness," notes Steckel.
- Don't be scared of higher service fees. "If you’re thinking about long-term protection, consider a plan with higher service fees to keep monthly costs and annual premiums lower. It’s all about balancing upfront savings with the security of knowing your home is protected when something breaks down."
- Don’t forget to review the fine print. "Understanding the coverage limits and exclusions in advance will help you avoid any surprises down the road when it’s time to file a claim. The key is to choose a plan that fits your home’s needs for the long haul."
Trends in Home Warranty Claims: What You Should Know
"When it comes to home warranties, there are some interesting trends that homeowners should be aware of," noted Steckel. "Did you know that there are now over 5 million home warranties in place, which is double what we had seven years ago?" I didn't.
He continued, highlighting that the surge reflects a growing recognition of the importance of having protection against unexpected repairs, especially as our homes age. "With many new players entering the market, we expect that number could rise to 10 million in the coming years, making these warranties more accessible with affordable plans."
"The industry itself has been growing at an annual rate of about 3.7% since 2017, showing that more homeowners are seeing the value in securing their investments," he shared. If you're considering a warranty, this is definitely a trend worth keeping an eye on.
Another trend? "Claims spike during extreme weather—whether it’s a heatwave pushing your A/C to the limit or freezing temperatures straining your heating system. And as claims go up, so do deductibles." This isn't shocking logic, but the compounding number of claims have taken a toll on the model providers are selling. "Deductibles have increased over the past few years and typically range from $50-$150, with many providers setting their standard deductibles around $75. However, it's important to note that some warranty companies allow homeowners to choose their deductible based on their premium costs; higher premiums often correlate with lower deductibles."
Steckel adds, "Just like prepping your home for winter or investing in energy-efficient updates, a home warranty is about future-proofing. But keep in mind, warranty plans aren’t a cure-all. They won't send a technician to cover pre-existing conditions or a customer's cosmetic issues. Regular maintenance—like getting your HVAC system and other appliances checked annually—can reduce the need for claims and keep things running smoothly. Think of your home warranty as a backup protection plan, not a replacement for routine care."
Can I buy into home warranty coverage after I already purchased a home?
This is a common question and one I posed myself after feeling stuck at the closing table. "Yes, existing homeowners can get home warranty coverage, and it’s a smart move, especially for those with aging systems and appliances," shared Steckel. "As homes age, components like HVAC units, garbage disposals, clothes dryers, water heaters, and kitchen or laundry appliances naturally wear down, so having a home warranty helps cover those unexpected breakdowns without a massive bill."
He emphasizes again that homeowners should look at home warranties as a backup plan, not as a substitute for maintenance associated with normal wear and tear or home improvement that requires a contractor. "Many providers offer basic plans specifically designed for older homes, but it’s important to stay on top of regular maintenance. Well-maintained systems are less likely to break down, and having service records can make filing claims easier. Keeping everything in good working order, combined with a solid home warranty, ensures you’re covered when the unexpected happens."
