Real Estate

Homeowner News: Home Warranty Policies

Repairing appliances around the house is inevitable, but are home warranty policies a good or bad investment? Here are some stats and costs to help you decide for yourself.

Replace or Repair

I wrote about learning this lesson the hard way in my first article in our April issue (visit www.sandiegopremier.net for full article), that when an appliance breaks down and needs to be replaced waiting will only cost you more. Because my appliance was not operating properly it cost me $200 extra on my electric bill for 7 months. That extra $1400 would have covered replacement cost. Don’t make the same mistake.

When deciding if a home warranty policy is right for you knowing the average cost of replacement and repairs is important. Note though that with a home warranty policy you do not always get to choose whether or not an appliance is replaced or simply repaired.

Appliances around the house

Appliance                    Replacement Cost       Average Repair Cost *

Dishwasher                 $499+                          $164

Air Conditioner           $2,000+                       $368

Washing Machine       $500+                          $88

Dryer                           $500+                          $110

Refrigerator                 $900+                          $157

Furnace                       $2,671+                       $170

Range/Oven                $569+                          $162

Water Heater               $587+                          $131

The average cost for a basic home warranty plan might be from $350 to $500 per year, according to the National Home Service Contract Association (NHSCA). Also keep in mind you will have an approximate $60+ trade service fee that you pay for each repair request (each companies price vary). According to American Home Shield, their average customer in 2009 had more then 2 services requests.  There may also be some additional costs associated with the repair or replacement item, discuss these with any company you may be considering.

Basic and optional coverage varies from company to company. Home service contracts are specific and do not include every appliance in your house. Make a list of all your appliances you want covered and go over that list with the company you are considering using.  Here is a list of typical covered systems and appliances:

· Interior Plumbing · Heating System · Electrical System · Water Heater · Ductwork · Dishwasher · Oven/Range/Cook-top · Garbage Disposal · Garage Door Opener
· Air Conditioning (may be found as an option)
· Refrigerator (may be found as an option)
· Washer/Dryer (may be found as an option)
· Pool Equipment (optional)
· Spa Equipment (optional)

Consumer Reports Magazine offers a timeline, knowing their life expectancies may help you decide whether it makes sense to repair an aging appliance or replace it.

Here’s their general guideline:

Trash Compactor – 6 years

Dishwasher – 9 years

Microwave – 9 years

Washer – 10 years

Dryer – 13 years

Water Heater (electric) – 11 years

Water Heater (tankless) – 20+ years

Garbage disposal – 12 years

Refrigerator – 13 years

Air conditioner – 10-15 years,

Garage Door Opener – 10-15 years

G   Gas Range – 15 years

If you decide on a Home Warranty it is important that the company you select be a licensed home service contract company (or possibly referred to as: home warranty company, home protection company, residential service company or home service contract company). You should go with a company that is a member company of the NHSCA, these are licensed companies in good standing that adhere to a strict code of ethics set forth by the Association to promote fair and ethical business practices.

Nine out of 10 existing homes in California are sold with a one-year home warranty, according to the Home Warranty Association of California. Warranties are typically purchased by home sellers as a bonus and enticement to buyers. If you have recently purchased a home find out if you have a home warranty policy and make sure to utilize it if you do. This is the ideal way to find out if a home warranty is right for you.

* Estimated repair costs from American Home shield

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