Author Topic: Should I cancel my home warranty?  (Read 7914 times)

Rein1987

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Should I cancel my home warranty?
« on: February 26, 2015, 11:08:59 AM »
We just bought a house, and we purchased home warranty for $390 a year without fully consideration. However, we then decided to buy replace some appliances to brand new ones, including ranges/oven (the older one's ignitor does not work, and we feel terrible using matches..), washers and dryers, home security systems, and we are thinking of replacing all toilets as well. As a result, I do not know how much space we left for the home warranty.

This is our first time to live in a house. We have no idea about whether a home warranty is worth $390. It's a HISCO total care plan. We can cancel it in our first month so we still have about two week time to think about it and cancel it. The house condition is OK, not too bad but not very good either. It was built in 1955. The property inspection already mentions some problems  so we have to fix them ourselves.

clarkm04

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Re: Should I cancel my home warranty?
« Reply #1 on: February 26, 2015, 11:12:06 AM »
Do you have an emergency fund to handle a worst case event?

If yes, then cancel.

If no, then keep it until you have a sufficient emergency fund.

Our seller paid for our warranty, but after a year I cancelled because our emergency fund would cover anything that might come up.


frugaliknowit

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Re: Should I cancel my home warranty?
« Reply #2 on: February 26, 2015, 11:18:54 AM »
Echo clarkm04.

Home warranties, on a large scale are designed to make the insurance companies money.  The dollar amount of risk they actually protect you from is small.  You are better of "self insuring" for appliances and such.

Rein1987

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Re: Should I cancel my home warranty?
« Reply #3 on: February 26, 2015, 11:36:20 AM »
Do you have an emergency fund to handle a worst case event?

If yes, then cancel.

If no, then keep it until you have a sufficient emergency fund.

Our seller paid for our warranty, but after a year I cancelled because our emergency fund would cover anything that might come up.

Thanks for the suggestion, it makes a lot of sense to me. I think I have enough emergency fund to cover issues.

On the other hand, if there is a WORST case, I'd rather get insured because I believe it will cost me way more than $390...so I'm more interested in know maybe the average or the cost distribution to handle home issues...

clarkm04

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Re: Should I cancel my home warranty?
« Reply #4 on: February 26, 2015, 11:53:03 AM »
When I cancelled mine, I looked at what the warranty covered and my homeowner's insurance and then determined if I could cover what the warranty protected out of pocket.

Once I knew we could, I let the policy expire.

You'll need to evaluate your policies to determine if you are good to cancel or if you should wait another year or two.

As an aside: The company we had was great.  I had two minor issues.  They got them fixed within 1 or 2 days for a low deductible.  I told the customer service lady this when we cancelled.  She still tried to push us to renew, but once I explained we have a EF to handle these future items, it's hard to justify a home warranty.

GizmoTX

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Re: Should I cancel my home warranty?
« Reply #5 on: February 26, 2015, 12:03:14 PM »
We've only used a home warranty when selling or buying a home, & the seller paid in both instances.  It helps remove any FUD (fear, uncertainty, & doubt). We've never kept a warranty beyond that first year.

Jack

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Re: Should I cancel my home warranty?
« Reply #6 on: February 26, 2015, 12:07:54 PM »
However, we then decided to buy replace some appliances to brand new ones, including ranges/oven (the older one's ignitor does not work, and we feel terrible using matches..)

Why didn't you just fix the stove's igniter? First of all, you had a warranty (even though it was probably bullshit -- see below). Second, I DIY'd mine a few months ago, and it only cost me about $25 and wasn't very hard to do. Third, igniters are wear items, and expected to last only a few years. If you're replacing your stove just because of that, you're wasting a ton of of money.

Why are you randomly deciding to upgrade bunches of appliances and toilets and whatnot? Do they actually need to be replaced, or are you just feeling paranoid that they'll break? (If that's the case, then the correct answer is to stop being paranoid!) A big part of home ownership is realizing that you need to be able to handle these sorts of issues without overreacting, which you're currently failing at.

In general, warranties are bullshit. This is even more true for add-on third-party warranties that you buy yourself (as opposed to manufacturer warranties that the item comes with by default). Not only will you lose because you'll make a bunch of payments but probably won't file many claims, even if you do make a claim the deductible or "service fee" or whatever often exceeds the cost of the repair! (I'd be willing to bet your warranty would charge you at least $75 to cover that $25 + labor stove igniter repair, for example.) This video should explain in detail why extended warranties (including house warranties) are generally a rip-off. (I say "should" because I haven't actually watched it since I'm at work.)

Remember, if a warranty/insurance were ever a good value for money then the company offering it would go bankrupt because claims would exceed premiums. The only reasons to have it are if you can't afford to risk going without (the common case), or if you know something that the company doesn't that makes your situation much riskier than they think it is (not likely).

FabricStache

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Re: Should I cancel my home warranty?
« Reply #7 on: February 26, 2015, 01:00:30 PM »
We had a home warranty paid for by the sellers when we bought our house.  We lucked out at had an A/C compressor go out and the water heater leak in the first year.  Both were replaced by the home warranty.  We had 2 general home inspections and an HVAC inspection.  No one can really tell when these things will die on you.  We also had a bar refrigerator start to act up but it wasn't covered by the warranty.  We had to pay extra to cover refrigerators other than the main kitchen one.  We didn't read the fine print.  The downside is that we had to use their vendors and neither of them were the best in the industry to put it lightly.  I have heard "horror" stories about these companies not wanting to repair or replace things due to ___ (insert lame excuse here).  We definitely got our money's worth and would have renewed but they didn't give us that option.

Aphalite

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Re: Should I cancel my home warranty?
« Reply #8 on: February 26, 2015, 01:06:34 PM »
Depends, as others have said usually a warranty isn't worth it, but if you have a really old furnace or HVAC system then it might be worth it to keep a warranty around until they break (normally it's anywhere from 20x to 50k warranty costs to replace a furnace in my area)

FarmerPete

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Re: Should I cancel my home warranty?
« Reply #9 on: February 26, 2015, 01:50:19 PM »
No one can tell you what your risk tolerance is.  Statistically, your money would be better spent in your pocket.  However, for some people, it will pay off.  For others, it wouldn't.  If I tell you to ditch the warranty, and then your furnace blows, I'm not going to pitch in money to get it fixed.  It's all on you.

My first used car I purchased, I bought an extended warranty.  Cost $1500.  During the terms, my transmission blew.  It had to be completely replaced.  Would have cost me $2200.  Since my "luck" with the warranty was good, I got an extended warranty when I bought my next car.  During the warranty, my head gasket blew.  That repair alone paid for the warranty.  My current car and my wifes car both have a warranty.  I really haven't used either.  I think I've got one more year on my wifes and two on mine.  Odds of reaching the cost in expenses is low.  So it all depends on luck.

minimustache1985

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Re: Should I cancel my home warranty?
« Reply #10 on: February 26, 2015, 02:30:26 PM »
Depends, as others have said usually a warranty isn't worth it, but if you have a really old furnace or HVAC system then it might be worth it to keep a warranty around until they break (normally it's anywhere from 20x to 50k warranty costs to replace a furnace in my area)
This is us.  We've used the warranty on enough things that I don't feel bad paying the premiums (water heater, spa pump, garage door repair) but we really keep it because our HVAC system is over 20 years old and replacing that would set us back a pretty penny.

Rein1987

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Re: Should I cancel my home warranty?
« Reply #11 on: February 26, 2015, 02:37:51 PM »
However, we then decided to buy replace some appliances to brand new ones, including ranges/oven (the older one's ignitor does not work, and we feel terrible using matches..)

Why didn't you just fix the stove's igniter? First of all, you had a warranty (even though it was probably bullshit -- see below). Second, I DIY'd mine a few months ago, and it only cost me about $25 and wasn't very hard to do. Third, igniters are wear items, and expected to last only a few years. If you're replacing your stove just because of that, you're wasting a ton of of money.

Why are you randomly deciding to upgrade bunches of appliances and toilets and whatnot? Do they actually need to be replaced, or are you just feeling paranoid that they'll break? (If that's the case, then the correct answer is to stop being paranoid!) A big part of home ownership is realizing that you need to be able to handle these sorts of issues without overreacting, which you're currently failing at.

In general, warranties are bullshit. This is even more true for add-on third-party warranties that you buy yourself (as opposed to manufacturer warranties that the item comes with by default). Not only will you lose because you'll make a bunch of payments but probably won't file many claims, even if you do make a claim the deductible or "service fee" or whatever often exceeds the cost of the repair! (I'd be willing to bet your warranty would charge you at least $75 to cover that $25 + labor stove igniter repair, for example.) This video should explain in detail why extended warranties (including house warranties) are generally a rip-off. (I say "should" because I haven't actually watched it since I'm at work.)

Remember, if a warranty/insurance were ever a good value for money then the company offering it would go bankrupt because claims would exceed premiums. The only reasons to have it are if you can't afford to risk going without (the common case), or if you know something that the company doesn't that makes your situation much riskier than they think it is (not likely).

For the range, we tried to fix, but no luck to get it done. The original company of the range would charge us more than $300 to fix it, so we chose to go for a better range. (Much higher BTU, better oven). Since this is a known issue in home inspection report, home warranty does not cover this. I really have no idea where I can get this fixed within $100.

For the washer and dryer, the seller took the original ones away to the new home. Our old dryer is an electric one and this house uses gas. We then replace both washer and dryer, and leave the old ones at our old condo (we will sell that condo with appliances).

For the toilets, we have not decided yet...My husband used to work in Japan for 5 years, and he is very very interested in getting the Japanese fancy toilets installed...This is not on our schedule yet, but we are considering replacing them if the old ones go wrong.

I totally agree with you that I'm overreacting on home ownership. I'm not trying to justify why we need to do these. Just sometimes, very small low quality things can really drive DH and me mad. I may need to consider more MMM way to do home improvement....

Jack

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Re: Should I cancel my home warranty?
« Reply #12 on: February 26, 2015, 03:00:44 PM »
For the range, we tried to fix, but no luck to get it done. The original company of the range would charge us more than $300 to fix it, so we chose to go for a better range. (Much higher BTU, better oven). Since this is a known issue in home inspection report, home warranty does not cover this. I really have no idea where I can get this fixed within $100.

Like I said before, DIY should be much less than $100 (unless maybe it's some sort of fancy range -- computerized, or a luxury brand or something). Otherwise, I'd expect to be able to find a third-party appliance repair shop, or maybe a repair service associated with an appliance retailer, to fix it for closer to $100. $300 is unreasonable; that's enough to buy a new range (at least a cheap one, or a mid-range one at an outlet store)!

For the washer and dryer, the seller took the original ones away to the new home. Our old dryer is an electric one and this house uses gas. We then replace both washer and dryer, and leave the old ones at our old condo (we will sell that condo with appliances).

Nobody says you have to use a gas dryer just because you have the hookup for it (assuming you also have the 240V outlet, of course). I have an electric dryer even though my house is equipped for gas because I could get the electric one for $300 at the outlet store, but the gas one would have been $700 retail. (If I wanted to match the washer, at least, which I cared about at the time.)

Of course, true mustachians would be air-drying instead of using the dryer at all (something I need to work on myself...).

My husband used to work in Japan for 5 years, and he is very very interested in getting the Japanese fancy toilets installed...

ಠ_ಠ

Nothing against the Japanese, but really? Totally frivolous.

Rein1987

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Re: Should I cancel my home warranty?
« Reply #13 on: February 26, 2015, 03:45:21 PM »
Like I said before, DIY should be much less than $100 (unless maybe it's some sort of fancy range -- computerized, or a luxury brand or something). Otherwise, I'd expect to be able to find a third-party appliance repair shop, or maybe a repair service associated with an appliance retailer, to fix it for closer to $100. $300 is unreasonable; that's enough to buy a new range (at least a cheap one, or a mid-range one at an outlet store)!

Nobody says you have to use a gas dryer just because you have the hookup for it (assuming you also have the 240V outlet, of course). I have an electric dryer even though my house is equipped for gas because I could get the electric one for $300 at the outlet store, but the gas one would have been $700 retail. (If I wanted to match the washer, at least, which I cared about at the time.)

Well, my DH and I are not very handy people. We tried and gave up on DIY the range. And, we do not have 240V outlet, and we do not dare to DIV a 240V outlet...

Thanks to the president day sale, we got a very good gas dryer for $350. The model is even newer than our new washer. (The washer was sold out when we got there, so got a more expensive and older model then...)