All Questions About Home Warranties Answered 

A home warranty (also known as a residential service contract) is a policy that provides financial protection for the repair or replacement of certain appliances and systems. It also offers convenience through a streamlined claims process and access to qualified service providers. 

Many home buyers, especially those looking at homes for sale in Cairns, negotiate with sellers to include a paid home warranty as part of the closing deal. However, homeowners are often unsure whether these warranties are worth it. 

What is a Home Warranty? 

Home warranties are insurance policies that cover some of the cost to repair or replace certain appliances and systems in a homeowner’s house. They’re not to be confused with homeowners insurance, which protects a home in the event of a fire or other calamity. 

Home warranty companies typically charge a monthly fee and offer upgrades to expand coverage to newer systems or appliances. It’s important to carefully review the contract describing standard, optional and upgraded coverage before buying a plan. 

A home warranty can be beneficial to people who don’t have enough money in their emergency fund or prefer to save the funds they would use for a repair bill. However, it’s also important to consider other options for saving money on unexpected repairs, such as budgeting and maintaining a well-stocked tool box. Damage caused by severe weather, vandalism or theft is not covered by a home warranty and remains the responsibility of either homeowner’s insurance or the homeowner, depending on the policy. 

What are the Benefits of a Home Warranty? 

Home warranties can be a good idea for homeowners who want the peace of mind of knowing that they have some protection against expensive, unforeseen repair bills. They may also be helpful for people who don’t have an emergency fund or prefer to reserve their savings for other purposes. 

A home warranty can also help new homeowners. They can provide reassurance to buyers who may not know the history of the home’s systems and appliances or, in the case of new homes, lack information about manufacturer or builder warranties. 

However, there are some drawbacks to home warranties as well. They don’t cover all issues, and you typically don’t get to choose your own service provider. In addition, you can’t always be guaranteed the repair or replacement will be completed quickly. This can be frustrating, especially if you have a pressing issue like a broken air conditioner in summer or a clogged toilet. You may need to wait for your home warranty company to schedule an appointment.

What are the Costs of a Home Warranty? 

A home warranty is a yearly contract between a homeowner and a home warranty company where the company agrees to pay for the repair or replacement of certain appliances and systems in a house. These contracts can be quite expensive, and it’s important for homeowners to evaluate whether the benefits outweigh the costs. 

The cost of a home warranty varies by provider, plan, and state. However, it’s generally in the range of several hundred dollars per year. This cost can be paid upfront or added to closing costs for new homeowners. 

A home warranty can save homeowners a significant amount of money in the long run by covering repairs and expenses that they would otherwise have to bear on their own. While it’s important to note that the home warranty company typically doesn’t choose which contractor will work on your appliance or system, they also may have limits on how much they will pay for a specific item or over a coverage period. 

Are Home Warranties Worth It? 

Lots of products come with warranties in case they break down, from smartphones to computers. Home warranties are also available, and millions of homeowners believe they’re worth the peace of mind in knowing that their expensive appliances and systems will be covered. What does the home warranty cover? They all range and vary from state to policy providers etc. 

If you’re purchasing a new home, the builder often provides a warranty for the home and appliances. You can also get additional coverage through a credit card that extends the manufacturer’s warranty for certain items. 

For older homes especially and those with little to no warranty protection, a home warranty is likely to save you money over time.

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