Imagine you’ve saved up and are now a proud owner of some high-quality home appliances. That’s great news, but you also need to remember that your expenses aren’t over. Those devices will need maintenance and they might break down no matter how well you take care of them. The same goes for any home system, like plumbing or electrical. As a smart homeowner, you need to be prepared for such expenses. This means you’ll need to build up a decent emergency fund or use services that can help you cut these costs, like a home warranty.
How Much Does It Cost to Care for Home Systems and Appliances?
Appliance repair costs might not seem like a big deal when you are investing in brand new gadgets. But you need to remember that even the best devices might break down. Quite often, the cause of it is some external factor. For example, minor flooding caused by a leaking roof might damage some electrical appliances. In this case, the manufacturer’s warranty won’t help you because the problem wasn’t caused by some fault of the device. Therefore, you’ll have to pay for repairs out of your own pocket.
That cost might be between $50 and $500 on average. Of course, the more complicated the repair, the more expensive it will be, and it’ll be even more so if some major part of the device needs a replacement. Fixing home systems will cost even more. For example, a minor job in plumbing ranges from $125 to $350 and a big one, like a leaking pipe or faucet, can cost $500-800 on average.
Do not forget that many home appliances and all home systems also require preventative maintenance. This won’t cost much, but missing it isn’t an option as it will increase the risk of breakdowns. Also, not being diligent with maintenance will make you ineligible for any warranty.
How to Be Prepared for High Repair Costs: Building an Emergency Fund
The best way to be prepared for unexpected expenses, like home appliance and system repairs, is to have an emergency fund. Sadly, it’s easier said than done because building saving up so much money is a problem for the majority of people. Doing some basic emergency fund calculations you’ll see that you’ll have to save up well over $1,000 for it to be of use. Even if you plan for nothing but unexpected appliance breakdown.
According to recent data, the majority of Americans are unable to cover even $1,000 in case of a major emergency. That means a sickness, accident or loss of a job, not something as insignificant as a broken AC unit.
However, there is no arguing the fact that having an emergency stash of cash is the best in any situation. Therefore, you should focus on building up this fund, even if you do it very slowly. In the meantime, you can protect yourself from paying huge repair bills using some specialized services.
Alternative Solution to an Emergency Repairs Fund: Home Warranty
Buying a home warranty plan can be a good alternative for those who do not yet have a big enough emergency repairs fund. This type of service contract will cost about $400-600 a year and it can cut down the costs of repairs significantly.
The home warranty industry is growing fast in the US as people are buying more expensive home appliances. However, there are under 200 providers and about 80% of the market belongs to the top ten. 2-10 is particularly well-known among them and stands out because it wasn’t involved in any major consumer scandals, like industry leaders including AHS. When choosing a home warranty provider, you should always check out its reputation through online sources.
In theory, a home warranty plan is extremely beneficial because it basically acts as your insurance plan does. This means that you pay a yearly premium and if something happens (appliance breaks down) the company covers the repair cost.
In fact, home warranty companies make it even easier n the homeowners because they act as a single point of contact for all contractors. Therefore, you only need to make one call to the company. They will send in a proper repair professional for any covered item.
Home warranty plans usually cover:
- Ductwork to code
- Ceiling and ventilation fans
- AC systems
- Fridge and freezer
- Oven and microwave
- Washer and dryer
- Garbage disposal
Why You Need to Be Extra-Careful with Home Warranties
At first glance, a home warranty plan seems like a fantastic deal, right?
However, in reality, this service might be a waste of money. It will all depend on the provider and the coverage you choose. That’s why it’s imperative to check the company’s reputation and only buy plans from trustworthy providers.
Many companies in this industry are known for claim denials and using loopholes in the contract to avoid payouts. You’ll need to read the contract carefully, including the fine print, and make sure that the terms and conditions are honest.
Also, you need to understand that all home warranty plans have a maximum coverage limit. Any amount exceeding this limit will go out from your pocket. Therefore, you need to check that the limit on offer is high enough to cover possible repair costs.
Another thing to keep in mind is that home warranty plans always include a service call fee. This means that every time you call for a contractor, you’ll pay about $70. You need to make sure that the fee the company charges isn’t too high.
As you can see, a home warranty plan needs careful consideration before buying. It can be very helpful in an emergency, but only if the plan is good. Therefore, take your time researching and comparing providers and studying their online reviews and customer testimonials.
Choose your coverage carefully as well. You should consider your home and think hard on what exactly you should cover with this plan. This will allow you to get the best value for money. If you choose well, even if you end up not needing to make any repairs through the year, the plan would benefit you anyway, for example through maintenance.