• John Caserta

Are Home Warranties Really Worth It?

If you're in the exciting process of buying a new home, you may be wondering if it's worth buying a home warranty, and how it differs from insurance. I spoke with WTNH to break down the pros and cons. Purchasing a home can be a great long-term investment but when things break it can be costly. So it’s tempting to consider buying a home warranty to help pay for those expensive repairs or even replace big-ticket items. But before buying a plan, it’s important to understand how it works and see if it’s the right option for you. Home warranties are not insurance plans. They are service contracts that promise to pay in the event that a covered item breaks and needs to be repaired or replaced. Plans can cover items like water heaters, heating and air conditioning units, plumbing and electrical systems, or even appliances. They can range in cost from several hundred dollars to over one thousand dollars per year – the more items covered, the more expensive the plan. While a plan can provide you with peace of mind, you should really consider whether or not you actually need the plan. Appliances often come with warranties and the option to purchase extended coverage. If you’re purchasing a home, ask about whether or not the appliances are still under warranty. If not, and the appliances are older, a home warranty might be a good option. It’s also important to understand under what conditions the warranty will pay to repair or replace an item. One of the most common complaints about home warranties is that they don’t pay out. And if they do, the payout is limited. Consumer advocates note that home warranties can often deny claims if there was a pre-existing condition or the item was not properly maintained - both of these issues can be difficult to dispute. And when it comes to replacing items like appliances, the replacement value can often account for depreciation. That means consumers would have to make up the difference to get a current model. If home warranties aren’t a fit for you, there are a number of alternatives that can help defray the cost of repairs or replacements. Many credit cards offer extended warranties on purchases. But keep in mind that if the item did not originally have a manufacturer’s warranty, the credit card will most likely not cover the item. You can also self-insure for breakdowns by putting money into a savings account. Having money available for emergencies can reduce the likelihood of racking up credit card debt for big repairs. And according to Consumer Reports, as a result of state laws, many products come with an unwritten implied warranty of merchantability, which means the item must function as reasonably expected for a reasonable period of time, typically four years.

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Securities and investment advisory services offered through Hornor, Townsend & Kent, LLC (HTK), Registered Investment Adviser, Member FINRA/SIPC. 210 Park Avenue Suite 101, Florham Park, NJ 07932 (973) 538-9100. HTK is a wholly-owned subsidiary of The Penn Mutual Life Insurance Company.  Caserta & de Jongh, LLC is independent of HTK, LLC. HTK does not provide legal and tax advice. Always consult a qualified tax advisor regarding your personal tax situation and a qualified legal professional for your personal estate planning situation. 

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Investment advisory and financial planning services are provided by John Caserta, HTK Investment Adviser Representative. Our representatives are insurance and securities licensed in our home state of CT, as well as additional states.  For more information, please contact our office.  This is not an offer or solicitation in any state where not properly licensed.