Home Warranty

[samclem]

I think the home warranties may make sense when you buy (or are trying to sell) a home. Since you don't know if the previous owner is selling you a home with tons of appliance problems, it helps to be able to transfer that possibly excessive and above the norm risk to a third party. But I wouldn't consider it for a home in which I'm living long-term.

Quote:

Originally Posted by MichaelB We have a service contract, and I think it is a good value, but it isn't a warranty or insurance product.

Service contact? So, you're basically pre-paying a company to fix anything that goes wrong during the year? I guess the the main difference from a home warranty is that you are dealing directly with the service company, not with a third party who finds someone to do the work. I can see some cost savings there, and also one less party to engage in finger pointing. And, yes, it's good that they have incentive to fix the problem in the most expeditious way, without a temptation to sell you a lot of other stuff.

[meierlde]

As noted home warranties are always a good deal for the insurer or they would not be offered. In general they must make money on the including the commission to the seller just like extended auto warranties.
So it then depends on how big an emergency fund you have if its big enough you can self insure for these sort of things and leave the insurance for true catastrophes.
It always has to be the case that including investment returns any insurance must at least break even or the premium has to increase.

[alistair]

We have a home warranty on our two rentals. Strangely, one tenant calls with several items needing to be fixed (e.g. microwave - 3x trips - Sears techs couldn't figure out that fuses are NEVER the source of a problem); second tenant never calls (older house to boot).

I'm not convinced it is worth it in the long run, but I have some peace of mind that I don't have to find a specific repair tech for each repair. We don't have a property manager for either rental (may change after current tenants move out). Previously I used a reliable HVAC / plumbing company for one rental (lived in the other).

They probably are worth the money for people moving into an older house with unknown issues (even after a home inspection).
After the first year, just self-insure with a savings account dedicated to repairs.

[Big_Hitter]

Quote:

Originally Posted by meierlde So it then depends on how big an emergency fund you have if its big enough you can self insure for these sort of things and leave the insurance for true catastrophes.

got a huge emergency fund but I don't want to blow 10K (or more) on two new HVAC units (or a boiler/heater).

[athena53]

Quote:

Originally Posted by MichaelB One thing I have noticed is how different the repair is when they do it compared with an independent repair business. The defects are simpler, easier to fix, and much faster that independent repair folks, who always take much longer and find much more serious, and costly, problems.

We bought one when we put our house on the market; coverage began as soon as we bought it. The realtor pointed out that it would be a good way to handle any problems the buyers encountered in the first year. Anyway, we had a dishwasher that always had a lot of water pooled in the bottom when it finished. We'd had multiple people in and they blamed the plumbing. Plumbers couldn't find anything wrong. After we got the warranty, the dishwasher conveniently died. (Thus, I felt less guilty about making a claim for an ongoing problem.) The buyer was thrilled; figured she'd get a new dishwasher. They sent out a guy from Sears who replaced the control panel. End of problem.

We also have one (paid for by the seller) on the house we bought. Our only attempt at a claim was when our fancy Electrolux refrigerator/freezer (came with the house) developed an intermittent problem with the freezer temperature rising unexpectedly and then going back to normal. Before the tech arrived, we realized that even a couple of ice cubes falling behind the freezer drawer section blocked the door from closing completely. I tried to cancel the appointment and got a confirming e-mail. That was after I had tried calling and spent too much time on hold and gave up. The day of the scheduled service call, a Sears technician called and said he was on his way. We told him not to bother.

The company is HMS. They sound better than the ones described in other posts. Even though the sticker price of the dishwasher repair was about half the premium we paid, I like the peace of mind it provides.