Is a home warranty a good investment?

Spending your money on maintenance is always wiser than buying a policy that kicks in only when something breaks. Here are a few hitches that can make a home warranty more trouble than it’s worth: 

1. The plan doesn’t cover everything in your house. Faucets and outdoor sprinklers, for example, usually are not covered, and you’ll probably have to pay extra if you want your refrigerator, washer/dryer and garage-door opener included in the package. Likewise, your pool and hot tub are extra. Tip: If you buy a home warranty, know what’s covered and what isn’t.
2. Pre-existing problems are not covered, even if you don’t know about them. Among the most common homeowner complaints about home warranties is that the plans too often decline to pay claims, claiming the appliance or system had the glitch before the homeowner got into the program. In fact, those who have complained say the more expensive the repair, the more likely they were to be told the problem was pre-existing. Tip: Insist that the warranty company inspect your appliances and HVAC system and notify you in writing of any pre-existing conditions, before you pay your annual fee. Chances are, the company won’t agree to do it. If that’s the case, you can hire a home inspector, but that will cost you as much as your warranty.
3. Appliances that should be replaced are repaired, and repaired, and repaired. It’s cheaper to repair than to replace, so that’s what warranty companies make every effort to do. Problem is, once your appliance hits a certain age or starts having chronic problems, it really is time for a new one. Don’t count on getting one. And when your plan expires, expect for the offending appliance to be excluded from coverage because of a pre-existing problem. Tip: You should replace your appliances every seven to 10 years. Newer models come with better technology and higher energy efficiency, so they cost less to operate.
4. Your request for a simple repair could wind up costing you a bundle on other work. Homeowners report that service techs, in the home to solve one program, often “sell” them additional repairs that are not covered by the plan. Plus, some plans require homeowners to pay to have old systems brought up to current building codes before their techs will work on them.
5. You can’t choose your own service techs. The warranty company has relationships with specific providers, and those are the ones who come to your house. So your regular plumber and your favorite HVAC pro, the ones you've dealt with for years and are comfortable having to your home, aren't the ones who will be coming around.       

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