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Home warranties are supposed to save you thousands of dollars. You’ve probably heard about the potential benefits in commercials, but it is important to remember that these are advertisements.
The validity of their claims can’t be trusted, but thankfully, the internet connects you with clients who have experience with these home warranty companies.
Some of these clients leave unbiased reviews that can help you figure out who to trust and who may be untrustworthy. The answer won’t be clear since figuring out if these warranties are worth it baffles even financial experts. Some think it’s better to take care of small repairs on your own while others think it’s better to trust warranty companies.
It is true that a big repair, like a plumbing or HVAC issue, could end up costing you a few thousand dollars to fix. You know how important these things are to your home.
Things can get pretty messy without a running toilet, and if you don’t have that kind of money, then you have a problem. It is here where a home warranty company can really shine. The emergency can be dealt with, even if you don’t have the money saved on your own.
The thing to consider is that major issues don’t really happen all the time. Most major appliances don’t fail too often. With proper maintenance, they could last 15 years or more depending on the appliance. You’ll end up paying for the warranty without using it for years, which is why some financial advisers don’t like these policies.
In essence, you want to calculate how much you spend per policy between repairs, and make sure you aren’t paying more for the policy than the repairs.
Furthermore, some warranty providers create policies that would allow them to weasel out of paying anything or paying much should you ever need their help.
One way some companies make extra money is by offering you upgrades that sound nice and cover certain aspects of your home.
Most likely, the part that is covered probably won’t fail. It is an upgrade that may sound good but is not really needed. Think about each upgrade carefully, making sure it is something that could actually fail.
It is important that you make sure you investigate a number of policies rather than just one. Read the policies, and make sure the rules set in the policy aren’t too strict. Some companies have rules to reduce the amount they offer you if they offer anything at all.
You can’t possibly investigate every home warranty provider. You are going to have to narrow down your choices so that you can dedicate your time to the right companies. There are a number of ways to do this, like by focusing on one type of plan. Cheap home warranty plans are a good example and can help you focus your search.
Now, keep in mind that these types of policies sometimes come with a depreciation cost clause, which is one way these companies keep their costs low. This is something you don’t want to see because it means the company can reduce the amount of money offered to you should an appliance fail. The money might not be enough to cover your costs. Not all budget warranties come with this clause, so make sure you read each policy.
You can definitely get a good policy if you make sure the policy matches your needs, and read all details to make sure this company is offering true value.
Yes, there are a few alternatives, and the one that financial advisers recommend the most is a self-insurance policy. This is a fancy way of saying you should create an emergency fund account that you can use if major repairs are needed. It may take a second to build a good safety net, but at least this is your money.
Credit cards can also help you from to time, but remember that credit cards come with some hefty costs. Make sure you try other options, like borrowing from a family member or a friend, before you resort to a credit card.
Hopefully, these points help you find a warranty that actually provides real value.