Home warranty coverage is meant to protect you from unexpected damages and repairs. But, how much money will having a home warranty policy actually save you?
An average Home Warranty service agreement will cost you around $350-$600 per year, and that doesn’t include the trade service fee (around $60-$100) that you have to pay every time you put in a claim for a repair or replacement.
Knowing that, will having a home warranty policy actually save you money?
Let’s crunch the numbers in more detail below:
How Much Do Home Warranties Cost?
First, let’s dig deep into home warranties by using a home warranty provider as an example.
For our purposes for the day, we’ll be using Total Home Protection (THP) as our example home warranty company. Total Home Protection is a home warranty service run by current CEO David Seruya and co-founder Ronald Seruya.
A home warranty service agreement with Total Home Protection will cost you about $500-$599 annually, which is well within the average cost for home warranty coverage. Their trade service fees are also at the industry-standard — at $75 per item serviced.
THP also offers several promos throughout the year for new customers, and they have a standing 30-day FREE cancellation policy that promises to give you a full refund in case you change your mind after signing up.
What is Covered by a Home Warranty Policy?
Now that you know how much it would cost you upfront, let’s talk about the value provided by purchasing that policy (again, the following information is based on Total Home Protection’s standard contract agreement — and may not reflect other home warranty providers.)
Total Home Protection has two different combination plans that you can choose from, plus a selection of add-ons that you can use to customize your coverage. (If you want to know more about the home appliances and systems covered by THP, there is a handy infographic available on Total Home Protection’s official website that you can check out!)
To summarize things quickly, however, here is a direct explanation from Total Home Protection’s CEO, David Seruya, “We offer two home warranty plans: Gold Plan and Platinum Plan. Both cover essential home systems and appliances; although the Platinum Plan supplies more extensive services.”
He continues this statement by saying that he believes THP is the ideal solution for families because “…Total Home Protection covers every repair or replacement, without considering the damaged equipment’s price.”
This means that they cover repairs or replacements of covered items without considering its age, make, or model — which is a unique characteristic that makes Total Home Protection’s service agreement a lot more flexible than most other home warranty providers.
Will Having A Home Warranty Policy Save You Money?
Now, it’s finally time to answer our big question for the day: Will having a home warranty policy save you money? For this, we’re going to break down the cost of repairs and replacements of home appliances and systems without a home warranty.
- Cost of Repairs: The cost of repairs without a home warranty varies depending on the home appliance/system that has incurred damages. Taking just one example, according to the Home Advisor, the repair of a damaged refrigerator will cost you $163-$500 on average (and may go as high as $1000 depending on what needs fixing.)
As a reminder, the average annual cost of Total Home Protection’s warranty is $500-$599.
Even adding up the $75 that you’ll need to pay to get that refrigerator repaired, you can imagine how much money you can save if several of your appliances and systems needed repairs in a single year! Not so much if it was just a single basic refrigerator repair, but we’re not done yet. We still need to consider the cost of replacements without a home warranty policy.
- Cost of Replacements: Going straight to our example, replacing the heating systems in your home will cost you up to $2,500-$6,100 without a home warranty.
Again, if you were to compare this price to the added cost of Total Home Protection’s annual premiums and deductibles, the benefit is clear: you will, definitely, save money in replacement costs if you have a home warranty policy!
The Bottom Line
Now that we’ve shown you how having a home warranty policy can save you money, the only question we have left is: is it worth it?
This is a question that can really only be answered by you.
The value of a home warranty policy is different for every family and different for every home. All we can say for sure is that there is value to home warranty policies, it’s just a matter of figuring out for yourself whether that value is worth an immediate investment or if it’s something to consider further down the line.