If you are not in a position to easily cope with financial emergencies, even though you work full time, you are not alone. Recent studies have shown that over 75% of workers in the U.S. live paycheck to paycheck. The reality is that Americans don’t have a lot of leeway when it comes to unexpected costs. Additionally, running out of money before the next paycheck can have the added penalty of causing you to have to incur late fees from not being able to pay bills on time. For these reasons, it’s important to take reasonable precautions against unexpected financial burdens where possible.
What is a Home Warranty?
To answer this question, let’s first make clear that a home warranty is different than homeowner’s insurance. Homeowner’s insurance is generally required by the bank before you can get a mortgage. It covers damage to your house as a result of emergencies such as fire, hurricane, theft, and other catastrophes. It can also cover costs that may accrue should a visitor on your property get hurt.
A home warranty, on the other hand, offers you protection if appliances in your home stop working when no emergency has occurred. After all, machines eventually break even under the best of circumstances.
What Does a Home Warranty Cover?
Various providers of home warranties cover different things, so it is important to have a clear understanding of your particular home warranty in order to avoid unpleasant surprises. For instance, a home warranty might cover different things than one offered in Maryland. That being said, items generally covered by home warranties include dishwashers, electrical systems, plumbing, heating, and air conditioning. Items not generally covered by home warranties include pools, spas, well pumps, septic systems, washing machines, and faucet repairs.
Again, neither of these lists are exhaustive, and provide only a general idea. It is important to consult your specific home warranty agreement to determine what is and is not covered. It is often times possible to pay a higher fee in order to add certain items to the list of things that are covered.
What Else Should I Know About Home Warranties?
In general, the way it works is that you notice one of your covered appliances or systems in your home stops working. At that point, you call up your home warranty company, and they in turn call a service person who they have an affiliation with. The service person then makes an appointment to come to your home and inspect the damage. The home warranty company then decides if the damage is something it covers based on the report given to them by the service person. Assuming the damage is covered, the service person then repairs or replaces the broken appliance.
There are reasons why repairs will not be covered, such as if the damage is not caused by normal use but is deemed to be caused by excessive or reckless use. Also, improper installation may be a cause for a home warranty to deny coverage. There may also be a maximum amount that can be paid for replacement items.
Having a home warranty is a good idea because it provides financial security, which in turn provides emotional security. Studies show that a sense that finances are in order is the biggest cause of happiness that Americans identify. Also, money problems constitute the largest source of stress.
Having a home warranty, then, solves two problems. First, it means that you won’t have to go without clean laundry for a week while you wait for your next paycheck to clear. Second, it will give you the peace of mind not to have to worry so much about money, because you know that the basic necessities that keep your household functioning are protected. You can’t put a price on feeling safe about how your life is going.