Tell me about your Home Warranty

When I bought my house in June 2009, it came with a one year home warranty that the seller’s offered as an incentive for purchase. In the past year, I’ve used it twice (once for my central heating unit and once for my hot water tank). However, it will be coming up for renewal soon and I’m reluctant to shell out the over $400 a year for a home warranty.

Although I did have a home inspection–which didn’t detect either problem that came up since then–my house was built in the 1940’s. I’m somewhat handy around the house for little things, but fixing a heating element in a hot water tank is beyond my scope of skills. Because the items were covered under the home warranty, I paid a $60 copay and never saw the actual bill of charges, so I don’t have anything to which to compare the services and fees. That makes it a bit difficult to determine how much the “actual” costs were and how much I saved (or or would have spent) on these services.

So tell all–do you have a home warranty? What does it cover and how often have you used it? What’s your take on purchasing one?

Home warranties are profitable for the companies that offer them. However, just like any insurance coverage, they get the benefit of the pool. You are taking a risk without it.

Which is better, the fixed premium cost and peace of mind, or the gamble that you will save money in the long run by not being covered? If you suddenly had to replace a water heater that wasn’t in your budget, would that strain your finances?

In other words, if you can self-insure, you will probably save money in the long run.

We also got a free year when we bought our house. That year, my heat pump died and they replaced it (would have cost $4,000). So, I renewed the next year, thinking I was way ahead of the game, and I used it for a few small things, and probably broke even. Since then, I’ve renewed each year. We have a lot of things on their last legs. They’ve increased the yearly premium, and the per use charge (up to $60 I think) but I generally get my money’s worth. One downside, some of the repair people they send out are not the best and the brightest, and several visits are sometimes needed (only the first once costs). Also, they like the “exclusions,” like for our “commercial stove.” When my furnace finally dies, and they buy me a new one, I’ll consider letting it lapse.

We used ours a bunch of times for the first year we owned the house (also a free year). Totally got our money’s worth. Then we didn’t get it any more, and things have been fine; we fix what we need to.

We had a service call for the refrigerator the first year, but that was it. We didn’t renew. The appliances in the house are at least five years old, so I would replace them if they crapped out on me. We negotiated a 10-year warranty on the heat pump, and the tankless water heater is new, so it’s pointless to give somebody over $400/yr for no reason.

It might also be good to mention what companies you have warranties with, because after you decide to buy one the next question is which one?