Home Budget Protection: How a Home Warranty Plan Can Help You Save Money

With inflation, rising interest rates, and other economic woes, many Americans are asking themselves, “How can I protect my budget?” There are some standard answers to this question: Eat out less, avoid unnecessary travel, and delay purchasing big-ticket and luxury items. Heeding this advice will result in increased savings, but what about those unforeseen expenses that arise when something in your home needs to be repaired or replaced?

You can always dip into your emergency fund when your dishwasher breaks down, but taking advantage of a home warranty is a wiser alternative. Let’s explore how a home warranty saves you money. According to a recent survey, more than one-third of households experienced at least one housing problem, with the national cost of addressing reported deficiencies estimated at $126.9 billion in 2018.
 

What Is a Home Warranty?

A home warranty is a service contract to maintain critical home equipment. Traditional policies cover things like refrigerators, dishwashers, laundry appliances, water heaters, and HVAC, electrical, and plumbing systems. Liberty Home Guard, however, also provides coverage options for home electronics, pool equipment, plumbing and lighting fixtures, generators, central vacuum systems, and water softeners—virtually anything! Our plans can be further augmented with a suite of home services, including pest control, gutter cleaning, rekeying, and septic tank pumping.

How Does a Home Warranty Work?

You can think of home warranty coverage as operating similarly to homeowner’s insurance or health insurance. The homeowner pays a monthly or annual premium to maintain active coverage. If an appliance or system that is covered by the plan malfunctions, the homeowner can submit a claim. The warranty provider will then tap its network of licensed and insured technicians to find a professional who can diagnose and repair the problem. With Liberty Home Guard, this process takes less than 48 hours.

After submitting a claim, the homeowner is responsible for a modest service fee—much like a copay—but the warranty company otherwise covers the cost of repair. In many cases, if the appliance or system component is beyond repair, the homeowner can receive a replacement or cash payout.

You can see how this can save a homeowner a substantial sum of money. Much like how health insurance protects someone from paying thousands of dollars out of pocket for a medical procedure, a home warranty prevents a homeowner from financing the full cost of, for example, a new refrigerator.

What Is the Difference Between Home Warranty Coverage and Homeowner’s Insurance?

Home warranties and homeowner’s insurance work on a similar principle, but there are important distinctions.

• Homeowner’s insurance provides financial protection for your home if it is damaged in a fire, storm, earthquake, or some other natural disaster. Homeowner’s insurance also often covers theft of your material possessions and your liability if someone is injured on your property. Most mortgage lenders require a home to be insured as a condition of providing a loan.
• A home warranty, unlike insurance, covers appliances and systems that need to be repaired or replaced after failing due to years of normal wear and tear.

There is no overlapping coverage between insurance and a home warranty. Their purviews are distinct. If you’re on a budget, homeowner’s insurance and a home warranty complement each other in protecting you against surprise home-related expenses.

How Much Does a Home Warranty Cost?

The cost of a home warranty is entirely dependent on the extent of coverage. A cheap home warranty might have a premium of $300 for the year and cover standard home appliances, such as a refrigerator, washer and dryer, cooking equipment, and dishwasher. More expensive plans can be more than twice that cost but will likely cover a greater number of items in the home.

In addition to the premium, the homeowner is responsible for paying a service fee when submitting a claim for service or repair. These fees also vary across plans and companies. The average service fee is between $75 and $150.

There are other potential costs to consider. Some plans may include a deductible, or the amount that the homeowner must pay before the plan begins to cover repair expenses. Many companies also include coverage limits to reduce the likelihood of policy abuse and fraud.

While you shop for a home warranty, request detailed quotes before signing a contract. Inquire about the extent of coverage and all associated costs so you’re not surprised by an exorbitant fee or denied claim.

Is Home Warranty Necessary for All Homeowners?

A home warranty isn’t required. It’s totally optional. But we recommend warranty coverage for most homeowners. It’s particularly beneficial for homeowners who have aging appliances and systems that can break down at a moment’s notice.

A significant reason for virtually all homeowners to consider warranty coverage is the variety of available policies. You can find inexpensive plans with narrow coverage terms or sweeping plans that protect everything in and around the home. With Liberty Home Guard, you can even customize your plan to suit your home’s specific needs, so there’s no need to worry about overpaying for coverage you don’t want or need.

Even if you have a newly built home with a builder’s guarantee and new appliances that are still under warranty, a home warranty can save you money on essential home services and maintenance.

What Are the Benefits of a Home Warranty?

• Savings. The primary benefit of a home warranty is savings on home repairs and maintenance. If a covered item breaks down, you pay a fraction of what you otherwise would have by hiring an independent technician. The key is to work with your provider to construct a plan that has a total annual cost that does not exceed your anticipated budget for home maintenance and repairs.
• Simplified budgeting. Because a home warranty premium is a fixed month-to-month expense, it is much easier for you to stick to your household budget. Your can enjoy planned expenses and reduce the likelihood of surprise bills.
• Convenience. With a home warranty, you don’t need to worry about finding a reliable tradesperson to service your home. Your provider will do the legwork.
• Peace of mind. It’s hard to put a price on the reassurance that a home warranty provides. You can relax knowing that if something breaks down, it will be repaired quickly and affordably.

How to Get Started

Interested in a warranty to protect your home and belongings? Call (866)-432-1283 to talk through Liberty Home Guard’s plans with a member of our team. Let us know the extent of coverage that is appropriate for your home, and we’ll provide a free quote. Learn why Liberty Home Guard is the top-ranked home warranty provider in the nation.