If you are a homeowner, you’ve probably received your share of offers to buy extended warranties or home service plans for your appliances, HVAC equipment, and other systems throughout your home. Home service plans come in all shapes and sizes – it’s not a one size fits all service, and that’s why you need to do your homework before deciding on buying one. Here are some questions to help you determine if you should get a home service plan.
What Does The Plan Cover & What Does It Cost?
Since not all home service plans are alike, you should look closely at the details of what’s covered and what’s not. According to BobVila.com, some service plans cover the HVAC system (furnace, AC), plumbing, water heater, refrigerator, oven, electrical system, washing machine and dryer, freezer, garbage disposal, and more. Others work more as an extended warranty (like with the purchase of new equipment) and service and repairs aren’t fully covered, but replacement parts/ equipment are. For others, it’s just the opposite.
“Many homeowners have called for service only to find that the failed part is not included under their policy,” says Keith Hill, technical support manager for Minnesota Air. “Many of these policies cover the minor and intermediate repairs, but not the big stuff like heat exchangers and AC compressors. Obviously, the more it covers the more it will cost. Also, be aware that parts may be covered separately from the labor to replace them.”
Just as with insurance policies or service contracts, most plans will cost you a monthly fee for coverage – some very minimal, others quite expensive. Inexpensive plans typically charge you a service fee if you use it (think of it like a deductible). The more high-priced plans cost more each month, but then nothing out of pocket when it comes time for repairs. Check the details!
Who Is Selling Me The Plan?
Keith says it’s important to also know who you are buying it from – the manufacturer, the contractor, or a third party. Some local energy companies also offer service plans as part of their packages. For example, in Minnesota, CenterPoint Energy’s Home Service Plus.
“When you need it in 10 or 12 years, will the company still be in business? Some home warranties offer complete unit replacement as part of their coverage,” he says. “Same rules apply here, know what is covered – both parts and the labor.”
Also, depending on who is selling you the service plan will determine when you can purchase it. Some companies only offer the service plan upfront – like when you buy new equipment or a new house, others you can purchase at any time.
How Old Are My Appliances?
Before you buy, ask yourself if your appliances are still under a manufacturer’s warranty, and if it’s even worth buying a plan. Most major appliances are covered for one to two years – and some service plans won’t cover your stuff until the manufacturer’s warranty is up.
For reference, data from Consumer Reports suggests that most major defects reveal themselves within the first year of use, and if they do break, the repairs cost about $16 more, on average, than a service plan.
If you have older appliances – like a furnace that tends to break down a lot or needs frequent repairs – then a service plan may be the best option. (Or better yet, save yourself the repair headaches and get it replaced at StayComfyMinnesota.com and we’ll hook you up with a great system.)
Age can make a difference in whether or not you should buy a home service plan.
What Type Of Person Are You?
Do you like to save or spend? Do you have a nest egg tucked away for unexpected repairs, or are you living paycheck to paycheck? Are you a person who hates surprises (ie. unexpected bills) and feels like a home service plan will provide you with confidence that you’re covered? Or are you a person who feels better setting money aside for repairs to be used only if needed?
“There is certainly a sense of security that comes from knowing you are covered,” says Keith. “But if you have a little nest egg put away for unexpected repairs, then maybe you’d rather pay as you go. In any case, it’s worth looking at the options, especially when buying new, because there may be a significant discount on the plan as an incentive to buy.”