What is a home warranty? How does it work? And what are the benefits and drawbacks?
A home warranty is a protection plan that covers major home systems and appliances, such as HVAC, plumbing, electrical, and water damage. It's usually offered by manufacturers or installers of these systems and provides financial assistance for repairs or replacements.
Most home warranties are coverage-based, meaning you pay a monthly premium to receive benefits. Here's an example of how it works: If your air conditioner breaks down due to normal use and maintenance, the warranty covers the cost of repair or replacement.
Some benefits of home warranties include: easy access to repair services, peace of mind knowing you're protected against unexpected repairs and replacements; reduced financial risk for homeowners; and potential cost savings over the long term.
However, there are also some drawbacks to consider: higher upfront costs compared to homeowners' insurance or extended warranties; limited coverage for minor issues that don't affect the system's performance; and potential penalties for non-compliance with warranty terms.