Know Your Deductible When Buying a Home Warranty
When buying a home, most of us consider things like neighborhood, floor plan, and amenities. Equally important, at least to your long-term ownership costs, is the age and condition of the home’s appliances and systems. While any home can be well served by home warranty coverage unexpected expenses, older homes reap the greatest benefit.
If you are in the process of buying an older home, or already own one, it’s probably worth taking a moment to consider the place of the deductible in the home warranty process and the home warranty service fees. Knowing the ins and outs of home warranty deductibles can be the difference between hassle-free home repair and major headaches. It can be the difference between one service call and chasing customer service.
This brief study will consider the current landscape of home warranty deductibles – what to look for, and what to avoid. If you’re thinking about how to best cover your home, this is one of the most essential pieces of information you can have. You can also view our list of top home warranty companies.
What is a Home Warranty Deductible, Anyway?
If you’ve ever bought insurance, you might be familiar with the general concept of a deductible. When something goes wrong, the deductible is what you have to pay before the insurance kicks in.
With home warranties, the concept is similar. Most home warranties have deductibles, sometimes known as service fees. When you call in for service using your home warranty, you will need to pay this fee in order to receive service. In other words, the service call fees are the home warranty deductibles. For example, Choice home warranty deductible is Choice home warranty service call fee, Select home warranty deductible is Select home warranty service call fee. In American Home Shield review you can find that American Home Shield service fee is the cost of a service call.
There are home warranty companies with no deductibles. It should be noted that while the vast majority of home warranty plans have a deductible, some do not and they don’t charge a service call fee. These are not specifically included in our survey because they are fewer in number, and less likely to be encountered by consumers. Most of the home warranties do have deductibles or low service call fees.
Some companies, like American Home Shield or TotalProtect Home Warranty, let their customers choose the amount of a deductible, which depends on the amount of premium. The higher the premium, the lower the deductible. For more detailed information on deductibles in different companies, please see the table below.
Home Warranty Deductibles in Different Companies
|Choice Home Warranty deductible||$60|
|Select Home Warranty deductible||$60|
|American Home Shield warranty deductible||$75 – $125|
|HMS Home Warranty deductible||$100|
|HSA Home Warranty deductible||$75 – $100|
|Fidelity home warranty deductible||$75|
|Home Warranty of America deductible||$75 – $100|
|First American Home Warranty deductible||$75|
|Old Republic Home Protection deductible||$65|
|Total Protect Home Warranty deductible||$75 – $125|
|Sears Home Warranty deductible||$75|
It is important to pay attention to the coverage limits on any plan. Maximum limits which are very low render the plans largely ineffectual. This study considered plans with deductibles and reasonably high compensation limits, and the potential to compensate for major repairs. That is, after all, the main reason why so many opt for a home warranty policy in the first place.
How Much Are Home Warranty Deductibles, and How Do They Affect Premiums?
We surveyed 86 home warranty policies from 20 different companies to discover what consumers can expect to pay for deductibles. We found that home warranty deductibles range from $50 to $125 for these major policies, with 42 of the policies, about half, at $75. A smaller number are higher at $100 (16) and the highest figure of $125 (7).
For premiums, we found a range from $240 annually to just over $1100. It might make sense that a higher premium would result in a lower deductible, right? This is not the case. In fact, some of the highest premiums have slightly higher deductibles and service fees.
At first glance, this may seem to confuse the situation further. How do you decide which plan to buy when premiums and deductibles have a minimal relationship?
In fact, however, knowing up front that premiums and deductibles are not proportionate in any regular sense frees you to make a choice based not only on price, but on coverage. You want to buy a plan you can afford to pay the premium and deductibles on, of course, but beyond that to ensure that you are covered for all potential issues in your home.
What Are Common Issues Reported Relating to Deductibles?
In order to discover the most common issues reported relating to home warranty deductibles, we surveyed 443 online comments and reviews relating to home warranty companies and found 58 which mentioned the deductible.
Reviews mentioned a wide array of issues for which coverage was invoked, including air conditioners, ovens, water heaters, and refrigerators. It’s important to note that a good home warranty will cover all of these and many other potential problems within the home.
Why, then, were deductibles mentioned in these reviews?
The majority of issues related to either the refusal to repair an issue after a deductible was paid (36 percent) or a delay in repairs after the deductible was paid (19 percent). This indicates that many problems relate directly to obtaining repair service after the deductible is paid.
A smaller number of consumers (22 percent) reported that repairs were done, but that the repair service was poor. Then, 14 percent mentioned that compensation was offered in lieu of repairs, and 9 percent mentioned other issues. Some consumers also complained that they paid a deductible several times for several visits on the same issue.
What Are Common Issues Reported Relating to Deductibles?
Finally, it’s important to consider the value of the deductible as a portion of the overall repair cost. In order to do make this calculation, let’s consider a hypothetical scenario in which all reviewers actually had repairs completed. If such were the case, what value would the deductible have represented?
Out of the 58 reviews surveyed, 13 paid less than 15 percent of overall repair cost as deductible, and 19 paid either 15 to 24 percent of the repair cost or 25 to 49 percent of the repair cost.
The value of repairs far exceeds the value of deductibles, especially when the repairs being sought are very expensive. In any given case, the ultimate value proposition depends upon the severity of the repairs. The more severe the repairs, the better value is the deductible by comparison, and the more money saved for the homeowner.
Consumers ought to be cautious in ensuring that repair service will be rendered by their home warranty provider in a fashion that addresses the issue head-on, in a timely fashion. With proper research, however, consumers are empowered to decide which companies are likely to provide better service, and which are not.
Conclusion: Know What Your Home Warranty Covers
Ultimately, the decision about buying a home warranty is one that only you can make based on your own parameters and priorities. Home warranties with deductibles offer the greatest range of options for ensuring proper coverage for common household issues, despite the service call fees.
As discovered by this survey, however, premium and deductible costs ought not be the sole determining factor in purchasing a home warranty. Sift through plans based on what you can afford, and then, on what best meets your needs.
The quality of a home warranty plan should be on the mind of every homeowner looking to invest in a home warranty. Keeping the issues in this article in mind will help to give context to that decision.
i Companies surveyed include: Anchor Home Warranty, Choice Home Warranty, Fidelity National Home Warranty, First American Home Buyers Protection, Hello Super, HMS Home Warranty, Old Republic Home Protection, Secure Home Warranty, Select Home Warranty, Total Home Protection, American Home Guard, Home Security of America, Home Warranty of America, Landmark Home, AFC Home Club, American Home Shield, TotalProtect Home Warranty
ii Review data sourced from www.mythrecents.com and www.outscam.com.