Home Warranty Companies - Yes or No

[Mrs. Ciz]

Just got something in the mail from Home Shield. The houses in our neighborhood are 23+ years old now. Most of us had our roofs replaced 5ish years ago due to damage from a massive hail storm, but other stuff is starting to wear out. Our retired neighbors were talking about getting Home Shield.

Is it cheaper just to replace/repair things as they break on our own or cheaper to subscribe to one of these services?

Pros? Cons? Experiences with home warranty companies?

 

[TippyThomas]

When I reviewed them the exclusions to coverage were so numerous and severe that it simply didn't seem worth it for the cost.

 

[tvguy]

Is it cheaper just to replace/repair things as they break on our own or cheaper to subscribe to one of these services?
Pros? Cons? Experiences with home warranty companies?

Odds are it is cheaper to just replace or repair things on your own. Think about it. They would go out of business if they didn't know that the premiums they are charging you are more than they will ever have to pay out in most cases. Sure, a FEW may get more in service than they pay in, but most will not. Check the coverage, some require you to use only their approved contractors, not one of your choosing.

 

[Cannot_Wait_4Disney]

If you get a home warranty you pay

Average maintenance costs plus a bit more so that they don't lose by covering you.
Marketing and other costs of the warranty company
profit to the warranty.company

If you don't get a home warranty you can expect to pay
Average maintenance costs.

In the long run, you're better off not getting those extended warranties.

 

[barkley]

is the company 'american home shield'? if so here's our experience-

back in '91 we bought our first home which was over 40 years old. the sale included the seller providing a year's coverage. we continued paying the premium for the duration of the 7 years we owned. ONE CLAIM more than paid for the premiums. we had an old hvac system that went out. replacing it would have been horrendously expensive b/c beyond the price of a new unit we would have had to have done a bunch of upgrades and changes b/c due to the age of our home we were grandfathered into older building codes but certain replacements of major items required meeting all the then current codes. american home shield sent out an hvac guy who then connected with some kind of sheet metal fabricator and a machinist to fabricate the parts needed to repair the unit (ran great).

now, that said-check to see if any warranty company soliciting you actually has contracted vendors in your area. when we moved to our current home we initially set up with american home shield but found they had next to none so we've taken to finding reputable local tradespeople and if they offer service contracts (like our hvac company does) we go with that (and again, we had an issue with our much newer hvac a couple of years ago that repairs would have cost more than a couple of years of premiums had we not had the contract).

i would be kind of surprised if many companies are still contracting with the home warranty companies since the demand right now for the trades so far outpaces their availability (and the home warranty contracts require something like maximum 72 hour response time in non emergencies).

 

[amcnj]

A new home I had purchased came with a home warranty for the first x years. When I read through the booklet I viewed it as more of a protection for the builder. By that I mean it spelled out what would be acceptable for remedying certain situations, many of which weren’t the best solution, at least in my opinion. But the builder would need only do that much and be absolved.

So as others have suggested, read everything carefully. It is basically insurance, and as with all forms of insurance, some will come out ahead, but most won’t. Another factor may be if you afford to pay for unexpected repairs without the policy. Or if setting aside the amount being charged for the warranty for those repairs would help you to be able to afford them.

I know someone who pays for a service plan through their utility provider. They have an old HVAC system that has been limping along and getting repaired for many years now. So they have definitely come out ahead and the utility seems very cooperative in performing said repairs. Hopefully you will get some feedback from users of that exact company so you can better gauge their effectiveness.
Good luck!

 

[tvguy]

back in '91 we bought our first home which was over 40 years old. the sale included the seller providing a year's coverage. we continued paying the premium for the duration of the 7 years we owned. ONE CLAIM more than paid for the premiums. we had an old hvac system that went out. replacing it would have been horrendously expensive b/c beyond the price of a new unit we would have had to have done a bunch of upgrades and changes b/c due to the age of our home we were grandfathered into older building codes but certain replacements of major items required meeting all the then current codes. american home shield sent out an hvac guy who then connected with some kind of sheet metal fabricator and a machinist to fabricate the parts needed to repair the unit (ran great).

An interesting point. I don't think they grandfather codes here anymore, you have to comply. Not sure the warranty company would pay for that. My son and daughter in law had to replace their HVAC with a warranty, and it covered about 60% of the cost. The other 40% was not covered by their warranty because it was necessary to meet current codes

 

[lynxstch]

When we bought this house, the seller had purchased a 1 year warranty for us. It was worthless..there were so many 'conditions' that every issue we had wasn't covered. We had an issue with the toilet being cracked,,nope, we can't cover it. We had an issue with the furnace which stopped working..nope we can't cover that. I told them to cancel it. We just find someone local if we need it, and don't bother with them anymore.

 

[_19disnA]

Insurance companies aren't charities and all of them are running a for-profit business where they have to take in more money then they payout. There are constantly sending out mailers or doing TV ads to drum up business for themselves. Know someone who had a home warranty (not sure what company), but it was a pain to deal with them. Every claim had to be preapproved and you could only choose from repair companies on their approved list. Their fine print also excluded many items you would have normally expected to be covered. Their off shore call center people barely spoke English and it was comical a few times I happened to be at their house when they were trying to explain a warranty related issue to the person who clearly had ZERO knowledge of home repairs. They also found that they mostly contract with the lowest cost vendors and many refuse to work with that company since there were such a pain to deal with. They didn't really save any money and the time/aggravation of trying to deal with the warranty company was not worth the hassle. They dropped their coverage and just decided to pay for repairs as things wear out.

We built a new home a couple of years ago and some company associated with the builder was CONSTANTLY calling to get us to sign-up for their 'extended warranty'...........no thanks !!! They finally stopped calling after they realized we weren't interested.

Everyone knows that things wear out in your home over time and these warranty companies have calculated the cost of premiums to be high enough to pay some of those costs (due to exclusions in the fine print) and still make money. Just set aside money for when things do need repair or wear out and you will be much better off !!!

 

[cats mom]

Our neighbor is having problems with her HVAC so she called her home warranty company. The guy who came out told her if she's waiting for the warranty to pay for a new unit, forget that, because the warranty company will go to the ends of the earth to track down parts and/or make modifications on old obsolete units before they'll pay for a new one. And if they do finally agree a new unit is necessary, there will be so many exclusions she'll be lucky if they cover 1/2 the cost. Not what you want to hear when there's an extreme heat warning and temps are hitting 115° or higher.

My general rule of thumb with any warranty = the company is in business to make money. Yes, a few people will likely come out ahead. The vast majority will not.

 

[DisneyTarheel]

Our neighbor is having problems with her HVAC so she called her home warranty company. The guy who came out told her if she's waiting for the warranty to pay for a new unit, forget that, because the warranty company will go to the ends of the earth to track down parts and/or make modifications on old obsolete units before they'll pay for a new one. And if they do finally agree a new unit is necessary, there will be so many exclusions she'll be lucky if they cover 1/2 the cost. Not what you want to hear when there's an extreme heat warning and temps are hitting 115° or higher.

My general rule of thumb with any warranty = the company is in business to make money. Yes, a few people will likely come out ahead. The vast majority will not.

And, in many cases the person they send to fix it is not who you would have picked were it up to you. Reputable, in-demand, repair/install companies aren‘t usually doing jobs for these warranty companies. There are exceptions, of course. Also, I believe there are some who let you choose your own contractor and just pay you a certain $.

You are generally better off putting aside the money you would pay for the warranty and using that when something breaks.

As always, there are exceptions, and some do come out ahead. Most don’t.

 

[starry_solo]

I have two co-workers who swear by their home warranties.... fixed a furnace, fixed some plumbing issue, etc.

 

[tvguy]

Our neighbor is having problems with her HVAC so she called her home warranty company. The guy who came out told her if she's waiting for the warranty to pay for a new unit, forget that, because the warranty company will go to the ends of the earth to track down parts and/or make modifications on old obsolete units before they'll pay for a new one. And if they do finally agree a new unit is necessary, there will be so many exclusions she'll be lucky if they cover 1/2 the cost. Not what you want to hear when there's an extreme heat warning and temps are hitting 115° or higher.

My general rule of thumb with any warranty = the company is in business to make money. Yes, a few people will likely come out ahead. The vast majority will not.

I have a 30 year old Trane heat pump. No warranty, but the same HVAC company has been coming out twice a year for the past 25 years to inspect it and the techs tell me there are seeing an increase in people who are paying for their own repairs who are electing to rebuild their systems rather than replace them. The newer systems have so many computer controls to make them more energy efficient, and those computer boards are often only used for just a few years, they can't get replacements for units as new as 10 years old. They have a lot of angry customers who shelled out $10,000 10 years ago for a new system having to spend it again when they could have rebuilt their old system for half the price.

 

[MrsJackSparrow4Life]

When we bought our house it came with a 13 month home warranty that we needed to use almost right away due to a broken AC. We didn’t get to choose who repaired/replaced it. They tried repairing it at first ($60 deductible) and that didn’t work. They then decided to replace it (another $60 deductible and $300 service fee) but we didn’t get to pick brand or model. Worked after that but not very well and we had to have the guy come out again (yet again $60 deductible) and he never was able to get it working 100% so we gave up.

2 years later it completely iced over and quit working altogether and when the company we chose to replace it looked over the previous guy’s work they were appalled with the crappy job. When we looked him up after that he was out of business (big surprise).

Needless to say we will never work with a home warranty company again. This one was supposed to be the best of the best and it was just money down the drain.

 

[MillauFr]

If you get a home warranty you pay

Average maintenance costs plus a bit more so that they don't lose by covering you.
Marketing and other costs of the warranty company
profit to the warranty.company

If you don't get a home warranty you can expect to pay
Average maintenance costs.

In the long run, you're better off not getting those extended warranties.

Couldn't have put it better myself. Insurance companies aren't charities. I buy insurance so I won't go bankrupt when my house burns to the ground and I have to pay $500k to rebuild it. I don't buy insurance to pay to replace my $10k furnace when it goes out.

 

[Kittyblue]

One of my friends has a home warranty and she’s hasn’t had good luck with her repairs so far. They've taken much longer to respond to issues than if she’d called a repair company on her own, and the quality of work has been mostly poor.

 

[nemodad]

I used to manage our companies (heavy construction machinery) exte warranty program and our profit level ran right at 49%. These programs are very profitable. So you are basically paying double what it costs for that coverage. I refuse to purchase these programs and just handle repairs myself

 

[wenrob]

You’re better off keeping a home repair fund IMO. As others have stated the list of what they won’t cover is longer than what they will and you’re stuck with their companies and time frame.

I’ve had two that came with the purchase of homes. The first was worthless. It covered nothing because it was an old house and the things that went out were considered “add ons.” The second in the house I am in now cost me almost as much as it would have had I not had it with the disadvantage of not having options. Right after the warranty on that expired we had a leak that led to about $8,000 in damage that I had to make a Homeowners claim on. The guys who did the repairs said it was due improper fittings and installation from the previous guy and that we were lucky it didn’t happen sooner. So no, not worth it.

 

[dvcgirl67]

We only bought one in Florida....when we were selling our home in Orlando just to have it as a "selling point". Really though, they're essentially worthless. Just kick up your emergency fund a bit if you're concerned.

 

[mikehn]

Thankfully they are not one of my robo callers.