Saving money with home warranty services – True or False?

It’s the financial sucker punch that lifelong renters turned homeowners never see coming – maintenance. Especially in preowned homes, these expenses can empty your checking account in a flash.

Don’t believe us? Just look at what re-wiring your house can cost you. If you buy a 40-year old home, your wiring could fail in 30 years or less. It all depends on whether the builder installed it correctly – if not, it could experience a short sooner than expected. If you need to re-wire your entire house, it could be a $3,500 bill for a smaller home. If you bought a bigger home, that figure could be as high as $20,000.

However, it’s the smaller bills that will deal your bank account a death by a thousand cuts. $1,000 here, $500 there – from appliance replacements to air-con repairs, they will collectively drain you dry.

What should you do then? Saving up a maintenance fund is one suggestion. However, when the average family struggles to pay the mortgage and the bills, this may not be feasible. More than 40% of Americans can’t afford a $400 emergency. 78% of us live paycheck-to-paycheck.

Getting a home warranty is another option. Despite not being common, they can pay for repairs/replacements that would otherwise put you in an awkward financial position. However, a great deal of controversy surrounds this industry, with scores of complaints against some companies.

Can home warranties help you save money on maintenance – or are they all elaborate scams? That’s the question we’ll answer for you in today’s article.

What is a home warranty, and how can it save me money?

There’s a good chance you haven’t heard of a home warranty before. That’s not your fault – according to a recent survey, only 4% of American households have them. However, thanks to their coverage of significant home maintenance costs, they may be a cash-saving option for you.

What is a home warranty, exactly? It is a home service contract that takes care of maintenance/replacement costs in return for a monthly premium. Whenever anything goes wrong with a covered home system or appliance, call your home warranty firm.

After confirming they cover the issue, they’ll dispatch the appropriate tradesperson to take care of it. When they send them, you’ll pay a small service fee, or deductible. It usually ranges between $60-$120 – within the financial reach of most Americans.

At this point, you’re probably scratching your head. Doesn’t a home warranty just shift the costs of home maintenance around? You’re half-right – it does for some customers. However, even in this case,  having a home warranty is often better than the status quo.

We never know when our fridge is going to die. We don’t lie awake at night, expecting it to quit any second. We get on with our lives – we go to the movies, shop for new clothes, and plan holidays. As a result, our checking account can handle a leaky faucet, but can it pay for a new fridge? A new furnace? To re-wire an entire house? Often, the answer is no.

A home warranty fixes this issue by turning maintenance into a predictable monthly expense. By setting up an auto-debit, you’ll never have to think about it. The premium comes out of your checking, leaving you with your spending money for the month. If something goes wrong, you pay the service fee, and the technician takes care of the rest.

However, instances exist where a home warranty can save you cash up front. Most Americans live in older homes – according to a survey by the National Association of Home Builders, the average house is 35 years old. A look at home maintenance calculators will show how costs approach $2,000 as a house approaches its 40th birthday.

Contrast that to the annual cost of a home warranty. The average price of a policy sits around $800. Assuming five calls per year at $70 per visit, and you’ll spend about $1,150 on maintenance with a home warranty. What would you do with an extra $850 per year?

When does it make sense to get a home warranty?

A home warranty makes dollars and cents for some homeowners. As we proved above, owners of older houses can profit massively from partnering with a reputable firm. It also makes sense if you own expensive appliances and home systems.

For instance, a central air con system can cost up to $1,600 to repair. To replace the whole thing, it can run you over $6,000. Even if your home is relatively new, expenses like these could ruin your finances. A home warranty can protect against an unforeseen defect that could leave you sweating on a hot summer’s night. Many diverse service providers in Kentucky exist on the market today. No matter what systems or appliances you have, there’s a firm that will cover your needs.

Here’s a better question: when does it NOT make sense to get a home warranty? Answer: when your house is brand new. Many developers have warranties that cover the homes they build. Average time frames are two years for systems, five years for roofs, and ten years for the foundation.

Check the paperwork you signed when you bought your new home. If you already have coverage, a home warranty might not make financial sense. Even if you don’t, home maintenance expenses for the first 8-10 years average less than home warranty premiums. If you have the fiscal discipline to pull it off, saving a maintenance fund can cover any surprise issues.

Home warranty horror stories: how some companies deny claims

Right now, you might feel that a home warranty is for you. Great! But hold up just a second – despite the benefits of home warranties, many shady firms exist in the industry. Before signing a policy, educate yourself about the underhanded tactics some companies use to avoid paying claims.

One should be familiar to just about everybody – the preexisting condition clause. Like the health insurance industry, a home warranty can deny claims because of a problem that existed beforehand. In this case, they’re implying you knew about the problem or precursors to it before getting the policy.

How can you avoid getting stung by this common rejection? Aside from performing regular preventative maintenance, get a home inspector to assess the state of your systems and appliances. If your home warranty firm tries to invoke the preexisting condition clause, you can produce a report that shows otherwise. Some companies pull this card regularly to avoid paying as many claims as possible. Others only do it when they feel justified in doing so. Trust us – you’ll want to do business with the latter firms.

Start by assessing consumer reviews on sites like Trustpilot. If you find scores of bad reviews for a specific company, drop them from consideration. After shortlisting several firms, compare them on in-depth review sites like This way, you’ll be able to find a reputable company that best meets your needs.

True or false: A home warranty will save me money

As with all complicated queries, the answer is: it depends. If your suburban home is brand new, a home warranty will cost more than it saves. Sign with the first company you find on Google, and they may take your money while delivering nothing in return.

However, if you have an older home and find a reputable firm, your savings could be substantial. With premiums coming in well-below average maintenance costs, it could free up badly-needed cash in your budget.