Originally published 9/17/2019
Should I have a home warranty?
For our buyer clients, we nearly always recommend asking for a home warranty on their new home. A home warranty, along with a professional home inspection, are two great tools for giving a home buyer peace of mind about one of the largest purchases they will ever make. A failure in one of your appliances could cost you hundreds. A failure in one of your major systems, such as air conditioning, could cost you thousands. If you have a home warranty that covers the failure, you will only have to pay the initial trade call fee.
Why are we bringing this up?
We have recent news about Freon types and HVAC systems. R-22 Freon, used in many installed HVAC systems, will no longer be manufactured after January, 2020. Many HVAC and home warranty companies are no longer installing R-22 based systems. However, reclaimed R-22 is projected to be available until January 2030, so existing HVAC systems can continue to be repaired. Some straight cooling systems can be fitted with an adapter that will allow them to continue operating with newer R-410A Freon. Most heat pump based systems cannot accommodate an R-410A adapter. We should anticipate that existing R-22 HVAC systems will need complete replacement sooner than expected. One of the larger expenses of HVAC service is the cost of the Freon itself. R-22 can cost as much as $135 per pound, and R-410A can cost up to $70 per pound.
So, should you consider extending or purchasing a home warranty policy?
It depends.
No, we’re not trying to duck the question. It really does depend – on what’s important to you. Here’s a quick rundown of the pros and cons:
- Do you want predictable costs? With a home warranty, you know your costs in advance. You will have to pay the annual premium for your policy. When you have to make a claim, you will have to pay a trade call fee, which is the initial diagnostic charge for the technician. For a covered charge, the warranty company will pay the rest, saving you hundreds or even thousands.
- Do you want the most for your money? On the other hand, the premium for a typical home warranty runs around $400-$700 annually, depending on your coverage level. If you are disciplined enough to save that money, that’s enough to cover repairs, establish a regular schedule of replacing your appliances, and build up a reserve fund for roof and HVAC replacements every 15-20 years. However, you will need to deal with the full cost of repairs when they happen.
- Do you want control over who makes the repairs? With a home warranty, your first call for a repair is to the warranty company. In many cases, the warranty company will select the technician. If you call for repairs directly, that may void coverage for that particular item.
- Do you want control over what gets done? In most cases, the warranty company will decide whether to repair or replace. If you are paying, you can make that decision.
- Do you want control over the repair schedule? With a home warranty call, the initial visit will just be for a diagnosis. The warranty company may take a few days before they decide to repair or replace. If you are paying for your own repairs, you can have the repair company do the work as soon as they can get you scheduled.
There are a number of home warranty companies available. Old Republic, American Home Shield, and 2-10 are some of most well-known. Take a look at their offerings. Note that some policies have different levels of coverage for Freon. Please call, text, or email us if you would like to discuss home warranties and we’ll be happy to help.