Home warranty services like Advanced Home Warranty offer to shield you from unexpected repair bills in exchange for $400 to $600 a year plus service fees.
You could sign up within minutes online and have coverage in place after a 30-day waiting period. But do you really need to?
Would the warranty protect you from out-of-control expenses or would it be just another bill to worry about? Could you find another way to pay for repairs?
To answer these questions with any certainty, you’d need to know the future, and we can’t help with that. You’ll have to settle for the next best thing: Studying the warranty to find out how it works and how it might (or might not) help you.
About Advanced Home Warranty
Advanced Home Warranty hasn’t been around very long, but its sister company, Choice Home Warranty, has provided warranties for decades. The companies offer very similar warranty plans.
Both companies offer lower-priced options compared to other warranty companies. You can save on premiums and service call fees.
You can also save by opting only for coverage on the systems you need, within certain parameters.
Advanced Home Warranty does not let you build your own customized warranty, but its plan structure lends itself to some customization.
Advanced Home Warranty’s Basic Plan
Advanced’s Basic option will cover the fundamental systems in your home with a couple of notable exceptions. The plan covers:
- Cooktop
- Ceiling and exhaust fans
- Dishwasher
- Ductwork
- Oven / range / stove
- Heating system
- Electrical system
- Plumbing system
- Plumbing stoppages
- Water heater
- Whirlpool bathtub
- Built-in microwave
- Garbage disposal
- Garage door opener
The Basic plan is a bargain at about $400 a year. But it does not cover your refrigerator, your clothes washer and dryer, or your air conditioner.
If you don’t need coverage for these systems, you could save with Advanced’s Basic Plan. If you do need this coverage, you’ll need the Total Plan.
Advanced Home Warranty’s Total Plan
The Total Plan includes everything in the Basic plan, along with your:
- Air conditioner
- Refrigerator
- Clothes washer/dryer
The Total Plan starts around $550 a year.
Optional Coverages Add Flexibility
With either the Basic or Total Plan, you could add coverages as needed in any combination to protect your:
- Additional spa
- Central vacuum
- Pool/spa
- Roof from leaks (limited protection)
- Standalone freezer
- Additional refrigerator
- Well pump
- Septic system
- Sump pump
- Septic tank plumbing
Each of these add-ons could cost between $20 and $50 extra a year. This flexibility allows you to include only the coverage you need without paying to protect a system you don’t even have.
When warranties bundle more coverages together, you’re more likely to pay for services you don’t need, like a central vacuum system when all you have is an old upright Hoover, or a sump pump when your home is built on a concrete slab.
How Advanced Home Warranty Works
Advanced Home Warranty gets high marks for giving you more control over how you build your warranty coverage.
But we’re still in the hypothetical phase of the shopping process. How would this translate if you bought a plan that meets your specific needs?
Filing a Warranty Claim
You can buy a warranty on your home right now without needing a home inspection or any documentation. Unless your home exceeds 5,000 square feet, you’ll get a standard pricing plan based on your ZIP code.
Like most warranties, you’d have to wait 30 days after signing the contract before you can file a claim with Advanced Home. After your 30-day waiting period, you could call the company’s toll-free service number 24 hours a day.
Paying Your Service Fee
Assuming your warranty covers your faulty system, the company will send out a technician within two days (four days on weekends or holidays).
The technician will charge you $60 to diagnose the problem. Service fee amounts vary between warranty companies, but charging this fee is standard practice. It works like a deductible on your homeowners insurance policy or a co-pay on your health insurance.
The technician will either:
- Fix the problem for no additional charge: This is the best case scenario, and if this happens you’ll feel good about your decision to buy the warranty.
- Have a more specialized contractor come out: You’re still getting the problem fixed, but it’ll take a little longer.
- Recommend replacing the system: As long as a replacement falls within your warranty’s annual spending caps, which we’ll get into below, you can get the system replaced at no charge.
- Inform you the warranty won’t fix your problem: This can be infuriating after you’ve already paid the premiums and the service fee. Prevent this scenario by reading the contract carefully before signing.
Your Contract’s Exclusions
Any home warranty comes with some exclusions which could deny coverage even to a covered system in your home.
Many new homeowners who buy a warranty feel surprised when the warranty denies their claims. Advanced Home Warranty’s sample contract spells out the exclusions, which are far too numerous to list here.
Exclusions include:
- For a refrigerator: Advanced won’t fix racks, shelves, lighting problems, ice makers, Freon, ice crushers, beverage dispensers, door hinges and gaskets, glass, Internet-connected features, spoiled food.
- For a clothes washer: The warranty won’t fix problems with door seals, filter screens, leveling and balancing, glass, soap dispensers, knobs and dials, hinges, damage to clothing.
- For an air conditioner: The warranty won’t cover condenser casings, electronic air cleaners, filters, humidifiers, gas air conditioning systems, registers and grills, non-ducted wall units, window units, water towers, improperly sized units, chillers, roof mounts, jacks, stands or supports, commercial grade equipment — this list goes on and on.
- Electrical system: The warranty won’t help with alarm systems, attic or exhaust fans, DC wiring, doorbells, fixtures, CO2 alarms, smoke detectors, inadequate wiring capacity, solar power panels or components, running new wires, damage due to power failure or surge. Again, this isn’t all.
The list of exclusions goes on for page after page, but the sampling above should show you the importance of checking the contract thoroughly before signing.
Annual Spending Caps
Your warranty’s contract should also tell you the maximum amount your warranty would pay each year. If your repair exceeds the spending cap, you’ll have to make up the difference out of pocket.
Most warranties have a comprehensive cap and/or a per-system cap. Here’s a sampling of Advanced Home Warranty’s spending caps:
- Heating system: $1,500 per year.
- Electrical system: $500 per year.
- Plumbing system: $500 per year.
- Ductwork: $500 per year.
Other Reasons for Non-Payment
Advanced Home Warranty will provide details in your contract about several other conditions which could prevent the company from paying to fix your system. For example, the warranty won’t pay for damage resulting from:
- Known or unknown pre-existing conditions
- Rust or corrosion
- Mildew or mold
- Sedentary build-up
Also, expect to cover the cost out of pocket for cutting through concrete or walls to access damaged systems. The company also won’t pay to repair cosmetic damage resulting from this kind of repair.
Alternatives to Advanced Home Warranty
Take a look at some of Advanced Home Warranty’s top competitors to ensure you get one of the best home warranties to protect your home.
Should You Get a Home Warranty?
At this point, many shoppers ask themselves, “Why even bother with a warranty? Why would anyone pay into a plan with so many exclusions?”
These are good questions. Yet thousands of homeowners buy warranty coverage every year because they like the idea of paying about $500 a year in exchange for a few thousand dollars worth of home repairs.
The key is knowing how to use a warranty: The warranty should repair or replace home systems that wear out from normal wear and tear.
A warranty won’t fix a system which faltered because of misuse, over-use, lack of regular maintenance, or improper installation. A warranty also won’t help with cosmetic issues or personal preferences. It won’t pay for maintenance, inspections, or to get your system up to code.
Warranties vs. Homeowners Insurance
Sometimes your homeowners insurance policy could help you repair system damage that a home warranty will exclude. If lightning strikes your home and fries the electrical panel, for instance, your warranty won’t pay but your homeowners policy should.
It’s easy to confuse these two sources of help. Basically, a warranty can help when a system in your home wears out from normal use. Your insurance should help when an outside force — wind, hail, lightning, a tree, a burglar, or fire — damages or destroys your property.
Understanding this difference can help place a home warranty in context.
Who Needs a Home Warranty?
Whether a home warranty makes sense for you depends partly on your home. In a home where systems will be less likely to wear out, a warranty makes less sense.
In a brand-new construction, for example, you’re less likely to need work on your electrical system or your plumbing system. Something could go wrong, of course, but statistically speaking, you’re less likely to face high repair bills than someone in a 35-year-old home.
However, if you bring your older refrigerator and clothes washer into your new home, those systems will be more likely to need repairs this year. Your warranty should reflect this reality.
Reasons Not To Get a Home Warranty
Along with the condition of your home, your overall financial situation can also help you decide whether to buy into a plan like the one Advanced Home Warranty provides.
If you have several vulnerable systems in your home and you have no idea where you’d come up with a couple thousand dollars if needed, a home warranty could be useful. I’m assuming, of course, the $400 to $600 in premiums wouldn’t be too much of a hardship.
If you have money saved or you have another plan for coming up with repair money, such as a low-interest line of credit, you could rely less on the protection of a warranty.
Also, if you know how to fix just about anything in your home, you’d probably be OK without a warranty. You’ll still need to save some money for parts, perhaps, but you’d have less need for a technician to come out and assess your ailing system.
Bottom Line: Follow the Rules
Home warranty companies like Advanced Home Warranty provide a concrete service: home system repairs. But they tend to sell customers on an abstract concept: a sense of security.
This sales pitch taps into your sense of fear as you enter homeownership. The pitch gives you an action to take (buying a warranty) to ease your fears of out-of-control repair bills.
To make the best decision as a consumer, you have to look beyond this sales pitch to see exactly how the warranty would (and when it wouldn’t) help you. These four rules can help:
- Understand What You’re Buying: We call these plans “home warranties,” but they hardly resemble a manufacturer’s warranty which will replace your phone or food processor. Instead, you’re buying a service contract which doesn’t come with very many guarantees. It can offer convenience and it should help replace or repair worn out systems.
- Read The Contract: Read and understand every word of your actual contract before you sign it. A sample contract like the one Advanced Home Warranty provides on its site will give you a good idea how the company works. But it’s not the same as the contract you’ll need to sign. If you don’t understand a clause, call customer service. If the rep can’t help you understand, consider moving on to another company.
- Customize Your Coverage: Advanced Home Warranty allows for more warranty customization than many companies. Try to avoid paying for coverage you couldn’t possibly use. Sometimes you’ll have to include a system or two you don’t need, but often you can create a customized plan.
- Have a Backup Plan: But wait, you might say, the warranty is my backup plan. Since warranties have so many limitations on service, you should still set aside some money for home system repairs. This can also help if your repair exceeds your warranty’s annual spending cap.
No, you can’t see the future and know for certain whether a warranty could save you money in the coming year. But learning as much as you can about Advanced Home Warranty in the present should help you avoid a lot of future frustration.
The post Advanced Home Warranty Review: Lower Prices With Flexibility appeared first on Good Financial Cents®.
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