The following is a Guest Post from Susan Ranford

Being a homeowner is expensive. Experts often suggest that saving 1% of your home’s total value every year is the bare minimum you will need to keep up with home maintenance costs.

For the average-sized US home with a $217,000 value, that adds up to $180 per month. This may not seem too bad. However, that money is only meant to cover routine home maintenance, not big-ticket items like a new furnace or refrigerator.

For these larger expenses, you’ll either have to dip into your savings or rely on a home warranty. Even if you have homeowner’s insurance, you will likely run into situations where that coverage simply isn’t enough. For one thing, homeowner’s insurance rarely covers the replacement of a broken-down appliance. However, that’s not the only reason you may want a home warranty.

Why You Should Get a Home Warranty

Home warranties start working fast in most cases. While some may require you to be enrolled for a few months before you have 100% coverage, others begin to take effect as soon as 30 days after your first payment is processed.

Then, if something in your home breaks down and is covered by your new home warranty they will send someone in their warranty network out to fix the item or assess the overall damage. If the item can’t be fixed, they’ll pay to replace it. You’re only responsible for any monthly fees and your deductible.

Without a home warranty, even something as simple as having someone come out to look at and repair a dishwasher can cost as much as $220, on average. And that’s the lowest cost for one of the many types of repairs covered by the average home warranty. An HVAC repair can cost up to $900.

With these numbers, it’s easy to see why you should get a home warranty. And, if nothing goes wrong for the first few years and then something needs a full replacement, you can rest assured knowing that you will be covered and not have to rush to come up with several thousand dollars to cover your average appliance replacement.

Those are the Benefits. What are the Risks of a Home Warranty?

Most of the risks you might encounter in a home warranty are encountered well before you need to make a claim. In most cases, you’ll only ever have problems if you happen to choose a policy offered by a company that won’t follow through if you make a claim. That, or they’ve added something to the fine print to make this process difficult.

However, if you choose to enroll in a reputable home warranty program, you should be able to make a home warranty claim, when you need to, with minimal risk involved.

What Should You Look for in a Home Warranty Program?

In order to ensure that you get the right home warranty, you’ll need to be aware of what that warranty covers. In some cases, you may get a warranty for kitchen appliances but not realize that it doesn’t cover the cost of labor, delivery, or installation.

Further, it may only cover one appliance every few years. If all of your appliances are about the same age, this could mean you’re looking at more out of pocket expenses than you had been budgeting for.

When choosing a home warranty, you may want to pay attention to the following details:

  • Indoor or Outdoor Coverage – Some home warranty programs will cover certain systems in the home, but not systems that are related to the home. So they may cover your kitchen appliances and HVAC system but not any outdoor appliances like grills and lawnmowers or the appliances you have in an outdoor workshop. However, often additional coverage may be purchased to cover these items.
  • Time Limits – If something breaks down, or you notice it’s not working as it should, you may want to contact your home warranty provider right away. There may be a time limit to how long you have to report an issue.
  • Labor, Installation, and Other Additional Fees – Does your home warranty provider cover all labor costs associated with a visit? They should. If they don’t, or they don’t have a policy in place to cover any follow-up visits after the installation of a new appliance, you may want to consider a different provider.
  • Percentages or Full Coverage – Most home warranties come with a deductible of some kind. Make sure you know what it is and that you find it acceptable. Some may be percentage based and others may be fixed-fee.