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To Warranty or Not to Warranty

Written by Chris O’Shea

Looking at HVACs and if a home warranty can help with repairs

If you’re a homeowner who has had to make significant repairs to your HVAC system, you know how financially painful that can be. The numbers back that up. Not only are HVAC systems some of the most expensive items in a home, their costs are increasing. The expenses tied to HVAC systems have many considering home warranties. But are they worth it? Here’s what you should know.

How Warranties Are Similar to Insurance

Home warranties operate a lot like insurance. You pay a monthly fee (usually between $30 and $80) and then a deductible when you need a technician to fix something. If your HVAC system goes haywire, you’d contact the home warranty company and they’d send out a tech. If the repairs are covered by the warranty, the company covers the costs. Home warranties typically cover HVAC systems, appliances, and more.

Not Similar to Insurance

This all sounds great, right? Well, home warranties aren’t legally considered insurance and therefore aren’t regulated like insurance is. And that’s where things get tricky.

The Fine Print

Home warranties aren’t regulated like insurance, which means you need to understand the contractual fine print of what is covered, what isn’t, and how much of the cost of repairs or replacement falls on you. There may be specific language included in the contract that exempts the warranty company from paying for certain repairs. If they do pay for repairs, there may be a maximum payout of the amount they will cover. And don’t forget about your monthly premiums when calculating the total cost of repairs. Protect yourself by reading and understanding what you’re getting into with the home warranty and if it makes financial sense for you to sign on the dotted line.

Do One Thing: If you do decide to get a home warranty, shop around for the best value. Ask questions and get second opinions. In most cases, you may be better off stashing money in a high-yield savings account to cover the costs of unexpected home repairs.