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Monday, November 18, 2019

Do I need coverage for all house repairs?

As a homeowner, there's so many things I need to think about that I didn't need to think about as a renter. One of the biggest ones is homeowners insurance. While I have a warranty for certain things for the first period of time because I bought a new home, insurance is very important. This article sent in by a reader offered me some great enlightenment.


You’ve stretched your household budget about as far as it can go. One unexpected expense is all it would take to plunge your family into unmanageable debt.

Feel like a financial failure? Don’t – most of us are in the same boat. We live in a country where 40% of people can’t afford a $400 emergency. 78% of us live paycheck-to-paycheck. The economy may be hot, but the jobs it's creating aren’t keeping up with the cost-of-living.

A big part of the problem is our aging housing stock. Soon, the average home in America will be 40 years old. At this age, many houses, especially poorly-built ones, begin to fall apart. The resulting repair/replacement costs are pushing many of our fellow Americans into the red.

Homeowners insurance doesn’t pay for broken furnaces and leaking pipes. Home warranties do. What are home warranties, and how can they help your family? We’ll explain in complete detail below.


Home repair costs can bleed you dry

Homeownership is no joke, especially these days. The second anything breaks, YOU’RE on the hook, not the landlord. If your dryer goes, you could spend up to $1,000. That leaky roof could result in a bill between $3,000 and $12,000 – or MORE.

And if you need to replace your furnace or central AC unit? After suffering the indignity of shivering or sweating, you could be out $6,000 to $8,000.

As we already mentioned, nearly half of us have less than $400 in emergency funds. How can anyone own a home without (a) being a 1%-er or (b) praying that nothing goes wrong?

It’s a serious dilemma, especially in a country that lionizes homeownership. In a search for answers, increasing numbers of homeowners have stumbled across a solution – home warranties.

How can a home warranty help my family?

Home warranties aren’t a new concept in America – they’ve just languished in obscurity for decades. In 1971, Sig Anderman founded American Home Shield. Back then, builders were erecting scores of homes for Boomers. These properties were brand new – as such, repair costs were low.

For decades, the market for home warranties was small. Even as these homes began to age, wages/salaries were high. The average homeowner could easily save for repair/replacement costs, so few needed a home warranty.

Fast forward to today. Wage growth the past couple of decades has been weak. Inflation has eroded its buying power. The economy might be hot right now, but our income has yet to catch up with our high cost of living. Meanwhile, those houses that were slapped together in the 1970s have begun to falter.

All of a sudden, interest in home warranties has surged. What is a home warranty, and how can it help your family? Think of a home warranty as insurance for your house’s appliances and systems. Every month, you’ll pay a premium, just as you do for your homeowners insurance policy.

So long as you carry out preventative maintenance, your home warranty will protect you against unexpected breakdowns. When your fridge dies, pick up the phone and call your firm. Upon approval, they’ll send the appropriate repair person to your house.

At this point, you’ll pay a nominal service fee, which is the same as an insurance deductible. For most firms, this fee ranges from $60 to $120.

Americans spend about $2,000 per year on household maintenance, repairs, and replacements. In 2019, the average home warranty policy costs between $318 to $894. The exact amount you’ll pay depends on various factors, like location and plan type. However, given the math, they offer incredible value to homeowners struggling with repair costs.

Which home warranty companies should I contact?

Do you live in a home that’s more than a decade old? If so, you should seriously consider getting a home warranty. However, know that not ALL companies are honest operators. Some attempt to weasel out of paying claims, by any means necessary. Others have poor quality control when it comes to hiring contractors.

Sorting through a long list of home warranty providers can get exhausting. So, we’ve taken it upon ourselves to list the most reputable home warranty firms in America. To give you an idea, “Select” are among them. Each dedicates themselves to serving the customer.

If the following firms serve your area, give them a good, long look:

Select Home Warranty

In seven years, this Phoenix-based home service company has become of the most trusted home warranty firms in America. Don’t take our word for it, though. Select has a rating of 4.1/5 on ConsumerAffairs.com on the strength of over 3,700 reviews.

Why have they scored so well? Their focus on customer service has won the day for them. They offer a 30-day no-risk trial, consistently hire high-quality contractors, and process replacement payments fast. They offer a broad slate of plans, and their premium promotions are among the best in the industry.

Select does a lot of things right, but they do have a tight claims windows of three days. Apart from that, Select Home Warranty is our top recommendation.

First American Home Warranty

In the home warranty industry, trust is a precious commodity. If integrity is your #1 priority, you can’t go wrong with First American Home Warranty. Like American Home Shield, they’ve been around for decades. First American took on their first client in 1984.

Unlike AHS, though, they haven’t hidden behind their brand while cutting corners. Instead, they’ve remained consistent in offering top-notch customer service while avoiding controversy. On top of that, they offer excellent customized plans. The fees for these plans are quite affordable, making it easy to build your own.

2-10 Home Buyers Warranty

2-10 is another market veteran, as they opened for business in 1983. Their brand is not as well-known, but they’ve quietly built up their business on word-of-mouth. A quick look at their Better Business Bureau page reveals an A rating. On AvidRatings.com, over 11,000 reviewers have given them a score of 4/5.

Apart from doing the little things right, they’re popular for one fundamental reason – claims. Of all the major home warranty firms, they have one of the highest acceptance rates. In other words, they don’t search for reasons to deny your claim.

One minor gripe: Their plan options are somewhat limited. Apart from this, if 2-10 operates in your area, they should make your shortlist.

Protect yourself against absurdly expensive repair costs

Do you need protection against the cost of home repairs? Given how expensive the cost of living is these days, you absolutely do. If your home is more than ten years old, the benefits of a home warranty plan outweigh the drawbacks.

Don’t let life’s pricey hiccups steal your disposable income. Sign up for a home warranty, and shock expenses will be a thing of the past.

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