We’re buying our first home. It seems like a fairly tame query, right? Post it on Facebook or Nextdoor, and you’ll be amazed at the passionate responses. You could ask “What political party do I belong to?”

Who knew people were so passionate about home warranties? Expect to hear some people call them a “scam” or at least a waste. Some will tell you how a warranty saved their furnace from freezing in the winter because they could not afford to fix it without it.

The decision is ultimately a personal one and will be based on your comfort level with the cost of replacing an expensive item in your home like the air conditioner or hot water heater if it malfunctions. We’ll break down three key details so you can make a well-informed decision.

Know the cost

Money Talks News reported that a basic home warranty can cost between $350 and $500 per year. Angie’s list says that a warranty usually covers kitchen appliances, plumbing and water heaters, heating and electrical components, sump pumps, whirlpool bathtubs, ceiling and exhaust fans and sump pumps. “‘Enhanced’ plans can be purchased for an additional $100 to $300 and provide coverage for items such as a refrigerator, garage door opener, washer and dryer, and air conditioning system. You can add optional coverage, such as for pools and septic system.”

You can usually break the annual cost down into monthly payments, but that’s not the only thing you have to pay. You’ll also have to pay for service calls. If you need a professional to fix a broken tub or microwave, you’ll have to pay for that.

“Home warranty deductible or service call fees is an important concept that you should master if your goal is to find the best home warranty plan for your needs,” said Home Warranties. Most home warranties require a deductible, or service fee, with an average of $75 per visit. Some companies, such as American Home Shield and TotalProtect Home Warranty let their customers select the amount of the deductible, depending on the amount paid. The higher the premium the lower the deductible.”

Consider your peace of Mind

Many homeowners choose a home warranty to cover major “just in case” scenarios. Just in case your air conditioning unit burns out. Just in case your hot water heater fails. If you don’t have the money to pay for a costly repair, it is a good idea to keep supplemental funds in reserve. The cost of these items can be thousands of dollars. According to HomeAdvisor, the average price for a new AC unit and installation is $5,413.

“A home warranty can be a good buffer for a homeowner without an emergency fund or a homeowner that wants to protect his emergency fund,” said Investopedia. Home warranties are also a good idea for people who don’t know how to fix things or who don’t want the hassle of finding a contractor. Warranties are also a good idea for people who have expensive appliances.

But…understand not everything is covered

There’s always the chance that your warranty will not cover an item for some reason. “A home warranty does not mean that the homeowner will spend no money on home repairs,” said Investopedia. Some problems will not be covered by a warranty, either because the homeowner did not purchase coverage for the item or because the warranty provider does not offer coverage for the item. Home warranties don’t usually cover components that aren’t properly maintained. If the warranty company denies the claim, the homeowner is still responsible for the service fee, as well as the repair costs.

In our case, the limitations in our home warranty contract about the replacement of outdated components and refrigerant for our broken air conditioner meant that we had to pay $1,500 out of our own pocket. It’s important to read the fine print.

Original Blog: Should You Buy a Home Warranty? – Realty Times