Home Warranty Cost

Home Warranty Costs Vary Greatly

Be sure to look for these top items when comparing home warranty costs

  1. Retail Home Warranty Costshome warranty costs

  2. Discounts

  3. Subscription rates

  4. Renewal rates

  5. Claim limits

  6. Underwriting

  7. Compliance

Let's look at each in detail!

Retail Home Warranty Costs

Home warranty costs vary depending on a number of factors, including:

  • Age of home, and sometimes even the square footage. Home warranty costs are most often blended in order to streamline coverage options. However, some home warranty companies do differentiate between larger or older homes. The older the house the higher the costs and the higher the claim limits. The bigger the house can also mean a higher home warranty cost.
  • Number of appliances and systems covered. Plans vary greatly in coverages and optional add ons. Usually, they cover kitchen and laundry appliances, home systems such as HVAC, plumbing and electrical. They can even offer optional coverages for pools, utility lines and even septic systems. The greater the number of products and systems covered, the greater the cost.
  • Annual versus monthly payment subscriptions. Annual payments are usually less expensive than monthly payments.
  • Claim limits are applied to the contract for the entire term, to a product in particular and sometimes to a claim or service event specifically. In one case, the home warranty cost is calculated using a $5000 term limit, a $1500 refrigerator limit and a $500 service call limit. That means the home warranty company will pay $5000 total over the contract term, $1500 total for refrigerator repairs over the term and $500 for an individual refrigerator service call.
  • Deductibles range from $50 to more than $100, depending on the plan.

Generally, Home Warranties are either underwritten by insurance companies or self-underwritten.  In either case, home warranty company price home warranties based on loss cost calculations, to come up with a premium, just like with car or home insurance.  Home warranty companies hopefully have databases of product failure information for consumer products like appliances and HVAC systems, so can determine exactly how often they fail and what it costs to fix them, by market.

The premiums paid to the home warranty company are 'reserved' by the insurers for future losses.  As home warranty service events occur and are managed by home warranty companies, they pay for the cost to repair or fulfill other contract features from the reserve. Well planned reserves are adequate to pay all future costs associated with a warranty plan.

The key here is that home warranty company a) need the information to determine home warranty costs correctly, so that b) they collect enough premiums to pay for future repairs, and c) they reserve funds to pay for those future repairs. 

Market home warranty costs for a plan that covers appliances and HVAC is around $800/year.

Discounts

Many industry home warranty companies sell based on fear and discounts. It's not uncommon to see daily or seasonal '10% off today' or $100 off if you buy now' messaging. Discounts don't impact home warranty underwritting or costs, simply the margin that home warranty companies make. However, don't be duped. Discounts don't usually apply to your home warranty renewal next year. So, your discount evaporates on the spot!

Subscription Rates 

Subscription rates tend to be higher. Consider any typical 'payment plan'. If you opt to pay for your new home over 30 years, or your new furniture over 2 years, you end up paying more in the end for the privilege of financing your plan. Since the home warranty can't collect all premium up front through a subscription, they are out their own dime on repairs until such time as your subscription equates to an annual payment. They charge a premium home warranty cost for that risk.

Renewal Rates

In the USA, homeowners renew home warranties at a rate of 50% or higher.  However, they're not getting discounts to do it. As a matter of fact, most home warranty plans increase after the first year of coverage. Expect to pay between 20 to 30% more in year 2.

Claim Limits

As home warranty companies and insurers create home warranty plans, home warranry costs are based on not only the loss costs, but the loss costs based on certain product, contract or claim limits and deductibles. Those limits aren't intended to present an opportunity to 'say no!' when a consumer calls for service, but rather to limit cost exposure so that the home warranty can be priced in such as way as to be affordable for homeowners.  As above, claim limits are applied to the contract for the entire term, to a product in particular and sometimes to a claim or service event specifically. Much, again like your home insurance, the higher the limit, the lower your cost. The home warranty companies have a vetted, contracted network of service providers which they use to perform repairs, that could be used by homeowners for other repairs, such as in the case where the claim limit has been met, but the product still needs service

Underwritten Home Warranties Costs can be Higher 

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However, underwriting provides the financial security of a large insurance company that will be responsible for funding your claims!

Homeowners should look for underwritten home warranty providers. The best home warranty companies are backed by insurance companies. If for some reason the home warranty company is unable to fulfill its obligation, then the insurer is committed to doing so. What's even more important is that an insurer will set a premium for the home warranty plan. Just like your home or car insurance, part of the premium paid is set aside to cover the costs of future repairs. Insurance companies employ scary smart actuaries that look at the expected frequency of failure (how often a product fails at a certain age, in a certain environment) and severity of the repair (what it will cost to fix it). The frequency X the severity, called loss cost, is what the insurer expects to pay out over time to cover its costs, so is what is reserved to insure future claims are paid. 

Consider a scenario, and sadly, a common scenario, where the home warranty company isn't insured and aren't experienced with service delivery. They don't know how to estimate their loss costs, and don't reserve funds to cover future repairs, operating on a cash basis. If they run out of cash, your repair doesn't get covered. OUCH.

Compliance Impacts Home Warranty Cost

Look for Home Warranty Companies that are compliant with state licensing and insurance requirements. 

Home warranty companies are regulated by some US states. Look for home warranty companies that do not skirt these requirements. 

In those states, home warranty companies must register with the state and become licensed by the state in order to sell and perform services there, and also often put up financial securities in the form of an insurance policy, cash or bonds. There are many home warranty companies in the market that opt to either bypass these state requirements (Oklahoma Regulator Says Unlicensed Home Warranty Company Not Paying Claims) or simply operate in unregulated states. What does this mean for homeowners? Non-compliant home warranty companies are hard to hold accountable. If they're not licensed with the state or haven't put up any financial securities, it's hard for a homeowner to get satisfaction if the home warranty company denies their claim or fails to perform service adequately. There is significant cost to go through through the licensing. That's why so many home warranty 'wanna be's' skip this critical home warranty cost. 

HomEase is not like most home warranty companies.  Home warranty companies focus on selling and not on customer service. Other home warranty companies hide behind obtuse legal documents, hidden fees and non-professional service techs.  They care more about profits than customers. They don't care about your time. Wait on hold? Ok. Wait for approval? OK.  Wait for techs? OK. 

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Frequently Asked Home Warranty Questions

 

What is a Home Warranty?

A home warranty is an annual service agreement that helps defray the expense to repair covered home system components and appliances when they break down due to normal wear and tear. 

When you request service, you'll pay a deductible to initiate the service request. 

We will schedule an appointment with a licensed, independent contractor with you to determine the issue. If the problem is covered by your home warranty, HomEase Customer Advocates will direct the contractor to repair or replace your covered item subject to the terms and conditions of the home warranty.

How is a Home Warranty different from homeowners insurance?

Homeowners insurance covers loss from incidents like fire, storms or vandalism. Home warranties pay for the cost to repair covered appliances and home systems. The coverage provided by a home warranty and homeowners insurance does not overlap but they do complement one another to provide comprehensive protection.

What does a Home Warranty cover?

A home warranty covers systems like central air conditioning, heating, plumbing, electrical, and water heaters as well as appliances such as refrigerators, stoves, washers and dryers.

What doesn’t a Home Warranty cover?

Home warranties don’t cover the costs to bring out-of-code systems into compliance, structural modifications, modifications to existing equipment, secondary damage and cosmetic issues are examples of items that may not be covered.

What's a deductible?

With a Home Warranty you pay an annual fee for the warranty. You pay a set deductible (fee) for each service call you request. The fee is collected prior to sending out a service professional to complete the request and the remainder of the bill is sent directly to HomEase by the contractor. The deductible keeps our costs down, so keeps your renewal costs down. You have no other of-pocket expenses!

Can I view a sample contract?

You can view a sample contract here. However, keep in mind that contracts and coverage vary from state to state.

When can I start using my plan?

You can start requesting service 30 days after you buy your warranty.

How do I file a claim?

When a covered item breaks down, request service by calling 833.FIX.HOMZ 

Your HomEase Customer Advocate will collect your deductible and coordinate a day and time to have a service professional come to your home. 

Your service professional will diagnose your problem and if it's covered by your home warranty, the technician will repair or replace your covered item subject to limitations and exclusions.

Are there any exclusions to my contract or limits to my coverage?

Yes. We cover breakdowns that occur due to normal wear and tear. We don’t cover damage. See how it works in this video. 

In addition, other exclusions and limitations may apply. See a sample terms and condition above.

How long does my contract last?

The standard home warranty on an existing home can be from 1- 3 years with renewals up to a certain date.

How do I request service?

Once your coverage begins, you can request service by calling 833.FIX.HOMZ.

Is there a limit to the number of repairs during my contract term?

No. We do not place a limit on the number of covered repairs, although some coverage limitations and exclusions, such as dollar amount caps, may apply.

How long until my covered item is fixed?

There are many factors that affect how long it will take for your covered item to be fixed (such as parts availability). However, since we’ve recruited our network ahead of time, our goal is to dispatch your job when you call and get the contractor out within 24 hours.

Who are the service professionals that HomEase sends out to customer’s homes?

We use licensed, independent contractors from our contracted repair network. They’re managed to specific customer service and repair metrics. And they’re reevaluated on a job by job basis. Our goal is to provide the best customer service experience possible. If a contractor falls off, he or she is out.

We thought the issue was fixed, but it’s not. What now?

We offer a 60-day warranty of work on repairs. The tech or a new one will be sent back out to get the job done.

Can I purchase coverage for my pool or outside utility line?

Yes. You can add coverage for your pool, in-ground spa or utility lines to any of our plans.

Doesn’t a manufacturer's warranty cover the same things a home warranty does?

A manufacturer's warranty typically covers the failed part of a single appliance or system, but it doesn't always cover the cost of the labor or repair. A home warranty pays to repair covered appliances and home systems that break down due to normal wear and tear outside the manufacturers’ warranties.

Can I cancel?

Yes, you can cancel at any time.

If you cancel your contract within the first 30 days of your coverage, we'll refund your contract fees minus any service and claims incurred.

 If you cancel your contract after 30 days, you'll receive a pro-rated refund of your contract fees for the rest of the contract term less any service or claims costs incurred. Terms may vary by state.

How do I cancel my Contract?

To cancel your contract, please call 833.FIX.HOMZ

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