Home warranties, also known as residential service contracts, are an excellent investment. Although they generally cost an annual premium, they can save homeowners thousands of dollars in the long run. 

However, buyers should carefully evaluate which appliances and systems they want covered before purchasing a warranty. And understand that the warranty won’t cover acts of God or natural disasters. 

When vetting home warranty companies, homeowners should also look at how their chosen company handles claims. Most companies have call centers or hotlines to handle inquiries, but some offer online or app-based claim-filing options as well. 

Regardless of the type of plan, homeowners should consider how much coverage they need. For instance, a homeowner who has an emergency fund built up may be better off with a smaller plan. Conversely, a homeowner who is moving into an older home may want to get a fuller policy. Home warranties can save homeowners from financial stress when systems and appliances break down or need replacing. 

1. Peace of Mind 

Lots of things come with warranties, from smartphones to cars to appliances. For homeowners on a budget, home warranties can be an easy way to ensure that unexpected breakdowns do not put them in financial turmoil. 

Regardless of your budget, it's difficult to predict when an appliance or system will break down, and many people want to have peace of mind knowing that their home warranty is there to help. 

Home warranty plans differ in terms of coverage, protection limits and service fees. As a result, choosing the right plan depends on a homeowner’s specific needs and budget. 

For example, some companies offer system- or appliance-only plans while others include both. But knowing that you aren’t having to pay a ton of money for repairs and replacements makes it an easier decision to make. 

2. Reduced Risk 

Having a home warranty can help protect new homeowners from being saddled with expensive repair bills. It can also give older homeowners peace of mind knowing that their aging appliances and systems are covered. 

However, it’s important for consumers to perform thorough research into the companies they choose and to read through the fine print of their contract. Home warranties don’t necessarily cover everything that the company advertises. For example, some plans have claim caps or may require a deductible for each service call. 

3. Increased Resale Value 

Some sellers will buy home warranties to offer the buyer a perk that can speed up closing and increase resale value. This can be especially important if the home

inspection reveals that several appliances and systems are nearing their end of life, or if the seller’s mortgage company requires a home warranty. 

Home warranties can be worth it for first-time homeowners who don’t know reliable contractors or have limited emergency funds, as well as for owners of older homes whose systems and appliances may be out of manufacturer warranties. While some people do not like the idea of a home warranty, millions of others find the peace of mind and protection that comes with having one worth the price. 

A home warranty can boost resale value by instilling confidence in buyers, differentiating the property from competitors, simplifying negotiations and offering transferable coverage. This can make a huge difference in today’s competitive real estate market. If you’re considering selling your home, consider adding a home warranty as an incentive for potential buyers. 

4. Reduced Repair Costs 

New homeowners can find themselves shelling out thousands of dollars in repairs when appliances and home systems break down. A warranty can help alleviate this burden. Learning how to clean a microwave is a lot easier than learning how to replace a dishwasher. 

While the cost of a home warranty can seem high upfront, many find that it saves them money in the long run. Instead of paying a service fee or thousands in repairs, they only owe the home warranty company a small deductible. 

Having a home warranty also reduces the risk of being overcharged by repair professionals. Home warranty companies often form relationships with local repair professionals and negotiate contracts to ensure that their customers get the best services for the lowest costs. 

Many homeowners will tell you that a home warranty is an excellent complement to standard homeowner’s insurance and worth getting.