Home Warranties - what are they and are they worth the cost?

Repairs are a normal part of owning a home, and the costs can add up quickly. 

Home warranties can help homeowners budget for repairs and avoid unexpected costs, especially for appliances and home systems that are more prone to breaking down. However, with UK shoppers paying £4 billion a year on warranties for goods often covered for free by consumer law.

What Is a Home Warranty? - Home warranties are renewable home service plans that provide discounted repair and replacement services for covered household appliances and systems. Contract terms vary, and coverage depends on the type of warranty you purchase. It does not provide the same coverage as homeowners insurance, so it’s important to know the difference between home warranties and home insurance. Homeowners’ insurance protects policyholders against damage to personal property and the home’s structure, such as fire damage or theft.

How Does a Home Warranty Work? - Home warranties are offered via contract for a monthly or annual fee. In the contract terms, you get a fixed service call fee and annual coverage limits for repairs. Service fees and coverage limits vary depending on the company. If a home system or appliance breaks down, you can file a claim online or contact your warranty’s customer service team. They connect you with an approved service provider to assess the problem and then carry out the repair.

How Much Is a Home Warranty? - The cost of a home warranty policy can vary depending on a number of factors including the size and age of your home, the coverage you choose, and the company you purchase it from. Home warranty costs are generally in the range of £300 to £600 per year. However, it's important to research different companies and compare their coverage and pricing to find the best deal. 

What Is and Isn't Covered in a Home Warranty Policy? - Home warranties are a complement to home insurance. Depending on what level of coverage you purchase, most plans will typically cover most major components of large home systems, such as your HVAC, water heaters, plumbing and electrical. Some plans cover appliances such as washers, dryers, refrigerators and stoves. However, these common items are generally excluded:

- Structural issues in foundations, walls, paint and flooring

- Commercial-grade equipment or systems

- Pre-existing conditions

- Normal wear and tear

- Rust, corrosion and sediment problems

- Improper maintenance, installation, design, manufacturer defect or previous repairs outside of the contract

- Detection and removal of asbestos, radon gas and mould

- Building and zoning code violations.

The good news are a lot of these issues that are not covered by warranties can be prevented with the help of smart home managements systems which inform users of the best time to carry out certain repairs based on when they are cheapest. This ranges from simple tips such as having a boiler fixed during the summer months which is cheaper than winter, up to predicting when issues will arise with certain instillations based on the data of thousands of homeowners with similar appliances.
By connecting and understanding data about our homes, we can save time, money and effort while moving towards a more sustainable future. Automating document filing, uploading bills and storing warranty information is a huge help. Imagine instantly having access to information about the lifespan and repair history of the boiler, how to reach the contractor who installed the oven, or when the gutters were last cleaned out.

Now technology can go even further. By creating a digital picture of our homes and how we use them, it's possible to predict what maintenance will be required or to anticipate potential system failures, as well as provide a financial overview of the home; where we spend the most money and how we can make savings.

An intelligent data system will be able to provide a holistic view of our homes to proactively give advice on how to make them more environmentally sustainable and evaluate what improvements will add the most value.

* Dasha Klyachko is chief executive and founder of home management platform Livlet *

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