Author Topic: Home Warranty  (Read 7109 times)

chilliepepper

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Home Warranty
« on: April 17, 2013, 01:03:38 PM »
I'm pretty sure I read around here somewhere that home warranties are for stupid people. Well, I guess we're stupid then...but so far, in the 10ish years that we've owned two different homes, we've recovered the cost of our home warranty each year when something broke and the warranty replaced it or had it fixed. So we may be stupid, but we've also been lucky so far.

At this point, in our current home, the only thing that hasn't been replaced is our furnace/AC system. The warranty has replaced our gas water heater, kitchen stove and dishwasher---and has also brought in plumbers for various leaks (I'm sure we'll have to repipe at some point and unfortunately, I'm pretty sure the warranty doesn't cover that). We didn't buy extra coverage for our fridge, washer or dryer and did have to replace those ourselves.

So I'm trying to figure out...should we ditch the warranty and just start self-funding a pot of money for when the AC/furnace goes out, or keep the warranty until we get that replaced too (and have whatever plumbing leaks fixed along the way as an added perk)? The system is quite old (can't remember for sure but I think it's 20+ years), so it seems like it's only a matter of time. If we ditch the warranty and the thing breaks this year, that's several thousand to replace it, right? But if we keep the warranty and it keeps running for 10 more years...well that's a lot of money that we could have kept.

What do you think?

Spork

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Re: Home Warranty
« Reply #1 on: April 17, 2013, 02:02:18 PM »

My gut is to ditch it, but...  how much does it cost? 

I tend to see home warranties as a marketing vehicle for selling a home.  The handful of houses I've sold, I've paid for a year of the warranty to plop in the listing as a "just in case you get a lemon, you're covered" marketing technique.  I've had the same done by other sellers for houses I've bought.  I've had a few things covered by them and was glad they were there... but I've never renewed them.  I've also paid for a huge foundation repair... and possibly could have come out ahead had I done so.

chilliepepper

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Re: Home Warranty
« Reply #2 on: April 17, 2013, 02:23:49 PM »
I'd have to look it up to be precise, but it's around $500 / year.

Johnny Aloha

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Re: Home Warranty
« Reply #3 on: April 17, 2013, 04:27:37 PM »
We had a home warranty on a house we bought.  Called them for a plumbing leak.  They said it was a pre-existing condition and didn't fix it.  Then I read online that most home warranty companies will try to find a way out of everything!

Obviously we didn't renew it.

chilliepepper

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Re: Home Warranty
« Reply #4 on: April 17, 2013, 06:23:08 PM »
That's what I've heard from others---but our experience has been that they've covered just about every claim we've made.

Still...

Alex in Virginia

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Re: Home Warranty
« Reply #5 on: April 21, 2013, 05:46:10 AM »

So I'm trying to figure out...should we ditch the warranty and just start self-funding a pot of money for when the AC/furnace goes out, or keep the warranty until we get that replaced too (and have whatever plumbing leaks fixed along the way as an added perk)? The system is quite old (can't remember for sure but I think it's 20+ years), so it seems like it's only a matter of time. If we ditch the warranty and the thing breaks this year, that's several thousand to replace it, right? But if we keep the warranty and it keeps running for 10 more years...well that's a lot of money that we could have kept.

What do you think?

I swear by my home warranty.  Have had one for over 10 years and it has paid for a shitload of repairs starting from the very first week I moved into a house and found a major problem with the furnace.  I'm way ahead on my annual premium (which has varied from around $450 to around $550).  Some examples of problems solved by my HOW: partial repiping of my water lines, replacement of my 400-foot-deep well pump, replacement of the well lines (separate incident), major fix on the furnace, fix on the ac unit, outright replacement of my clothes dryer, and so on.

I mean, how much less than $500 a year do you expect to pay for the peace of mind of knowing you are covered if something major happens to any of your home's operating systems?

What we do is carry the HOW policy AND maintain a home-repair-and-improvement fund that we add on each month (but cap when it hits $3000).

Hope that helps!

Alex in Virginia

Dr.Vibrissae

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Re: Home Warranty
« Reply #6 on: April 21, 2013, 07:35:31 AM »
Argh!  I'm wrestling with this now.  Our house has a really old, patched together AC and an ancient furnace that the contractors tell me they won't work on, so if one goes I'll probablly have to replace them both.  I just can't decide if the warrantee is worth it though, I'm afraid I'll pay and when the thing breaks down they'll call it a pre-existing problem and I'll have wasted my money.  The one that came with the house expires in 10 days.

arebelspy

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Re: Home Warranty
« Reply #7 on: April 21, 2013, 07:40:38 AM »
Sme anecdotal proof they aren't worth it: landlords don't get them usually.

If they were cost effective, people owning many homes would have them, but instead it's more cost effective to pay someone to fix stuff.

If you need to "buy" peace of mind, do so.  But - on average (like most/all?) insurance - it isn't worth it money-wise (individual, self-reported anecdotes aside.)

I'm more peaceful with cash in my pocket, even if I have to pay that cash for some repairs.

Disclaimer: I may eventually go the home warranty route to help manage out of state properties without a property manager (when I'm not local to deal with contractors).  Then again, maybe not.  It's an option, but the only reason it would be cost-effective there is not because of the repairs, but because of the money it would save on management fees.
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Another Reader

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Re: Home Warranty
« Reply #8 on: April 21, 2013, 08:03:44 AM »
Trying to save on management fees out of state by using a home warranty company did not work for me.  No matter how good you think your tenants are, something will go wrong.  In-town management is more likely to catch it than you are, and can respond faster. 

Home warranty companies generally hire mediocre vendors at best and they do the cheapest band-aid repairs or tell you the repair is not covered.  If you are not there to argue, you are going to end up paying out of your pocket anyway.  I do have some properties out of state that are self managed, but they are in an area where I already have vendors and handypeople that can diagnose and repair most problems. 

arebelspy

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Re: Home Warranty
« Reply #9 on: April 21, 2013, 08:18:56 AM »
Trying to save on management fees out of state by using a home warranty company did not work for me.  No matter how good you think your tenants are, something will go wrong.  In-town management is more likely to catch it than you are, and can respond faster. 

Home warranty companies generally hire mediocre vendors at best and they do the cheapest band-aid repairs or tell you the repair is not covered.  If you are not there to argue, you are going to end up paying out of your pocket anyway.  I do have some properties out of state that are self managed, but they are in an area where I already have vendors and handypeople that can diagnose and repair most problems.

That's pretty much what I've figured, but I wanted to throw the disclaimer on there because it is an option I've been considering for the future.

Appreciate the advice, definitely will take it into account.
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chilliepepper

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Re: Home Warranty
« Reply #10 on: April 21, 2013, 01:56:28 PM »
Argh!  I'm wrestling with this now.  Our house has a really old, patched together AC and an ancient furnace that the contractors tell me they won't work on, so if one goes I'll probablly have to replace them both.  I just can't decide if the warrantee is worth it though, I'm afraid I'll pay and when the thing breaks down they'll call it a pre-existing problem and I'll have wasted my money.  The one that came with the house expires in 10 days.

Our situation is similar. I had someone come yesterday to inspect and tune up our 23-year-old furnace and A/C, and he wouldn't even touch the furnace and didn't charge me for the inspection. He forbade me to even turn on the heat again without replacing the furnace; you can see piles of rusty debris that has fallen out of the heat exchange resulting in a carbon monoxide risk. It's falling off in sheets. As for the A/C he said it's safe to use it this summer, but strongly recommended replacing it along with the furnace because it's ancient, uses R-22 freon which is being phased out and I probably won't be able to get the thing serviced anymore.

I went ahead and called in a claim to our Home Warranty (American Home Shield) which expires this Tuesday. Verified that as long as I called it in before the contract expires, any service or replacement will be covered under our existing contract even if it's not completed before it expires (which it obviously won't). Granted, I will have to pay the $75 deductible...even for them to come and tell me that they're not going to do squat for me...but I decided to take that risk, because I think there's a chance they will get me at least a new furnace.

It's hard to say, since the contract states "3. AHS will repair or replace items which malfunction due to insufficient maintenance, rust, corrosion, or sediment." They may well say that since the furnace hasn't actually "malfunctioned," (i.e. it does still heat the house), it's not covered. On the other hand, they may wish to avoid liability/bad press for a family of 5 dying from carbon monoxide poisoning and replace it for us on that basis. :)

The nice thing about AHS is that they do give you a cash option. That is, if you'd rather go find your own contractor and choose your own equipment, they'll give you some money to do so. Granted, it won't really be enough in this case, since I can't get the same prices on stuff and I probably want better stuff than they would give me---but it does help. If the claim is covered, I will for sure get well over the $500ish that I paid for my coverage this year (which I already recovered, and then some, when they replaced our dishwasher).

Does anyone have any advice as to tactics I might take in arguing our case if they try to deny the claim? I've had some luck negotiating with them in the past (they finally replaced our dishwasher after their first contractor tried to blame the leak on plumbing but agreed to send out another contractor for a second opinion and he agreed with me that the dishwasher needed to be replaced), so I'm open to some suggestions on how I could make the case that they really should cover it, since while the thing may "work," it's obviously unsafe to use. Do they really want me to keep using it until it actually breaks, and in the meantime expose myself and my family to a significant health risk?

Anyway...in either case, I may drop the coverage for this next year. I mean, since the furnace and A/C are the last remaining things that I worry about, if they cover it under our current contract, great, and then I won't need them anymore (can self-fund from now on, bargaining that most of my stuff shouldn't need replacing for awhile). If they don't cover it, shame on them and I will drop them like a hot potato and then shout it from the rooftops that they would rather let their clients die of carbon monoxide poisoning than provide them with safe equipment to use in their home.

frugalcoconut

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Re: Home Warranty
« Reply #11 on: April 21, 2013, 03:24:49 PM »
I have a home warranty contract on my primary residence but not on my investment property.

My primary residence is a relatively newer townhouse (built 2005) and the cost was $275 at the most recent renewal.  In the past 2 1/2 years I've used them for a major plumbing issue in the shower, multiple uncloggings of the shower drain (I use the hair catchers but apparently they only delay the inevitable), unjamming/unclogging/replacing the garbage disposal, replacing the cracked lid switch on my washing machine, adjusting a toilet that had periodic running water, replacing A/C fan motor, etc.  For me, I'd rather just call them up and have them resolve whatever the problem is.  It gives me peace of mind but it's also been a good value so far.  I've never had a year where I didn't call them out here for at least something.

I have debated whether to get this coverage for my rental property (built 1994) ... but I've decided that it wouldn't be worth it.  My tenants seem to be pretty self-sufficient.  I've had to deal with a couple of repairs but I believe that I spent less on those than if I had opted for the service contract instead.