A home warranty plan is designed to protect the systems and appliances in your home from damage, malfunctions, or failure. Home warranties are offered by major market players, and lesser-known entities. When you consider a home warranty plan, it’s important to factor in the cost of the plan, the coverage you receive, and the deductible. Many of us pay close attention to the location of the real estate we purchase, the amenities and facilities, the square footage, and the floor plan. However, there are many other components within the home that require careful consideration.
These include the kitchen appliances and systems, swimming pool motor, garage door motor, insinkerators, washers and dryers etc. These working systems are subject to wear and tear, and they routinely break down after time. This is especially true in older homes. When it comes to selecting a home warranty plan, the cost of the plan, the condition of the appliances, and the size of the deductible matter. Leading home warranty plan aggregators routinely get asked the question: What is a deductible? To answer this question, we need to assess the services provided by home warranty companies.
For the most part, home warranty providers require customers to pay a set fee whenever a maintenance technician or assessor is called out for a problem. This fee ranges between $50 and $75 on average. Many of the top home warranty companies make it clear that this fee is billed irrespective of the cost of the plan you select. In everyday jargon, this set fee is known as a deductible. It’s the cost that the customer must pay whenever maintenance or repair services are expected from the home warranty company.
$50 to $75 Deductibles are Standard with Home Warranty Plans
However, there are a handful of home warranty companies that do not expect their clients to pay a deductible. For these home warranty companies, it’s important to scrutinize the terms and conditions of each plan, and the coverage they offer. If a home warranty company has no deductible, yet offers an affordable plan with no coverage – it is essentially useless.
That’s why it’s important to consider home warranty plans with extensive coverage and reasonably priced deductibles. The modern home has many working systems, appliances and gadgets running. These need to be protected against damage, and the only way to do that is home warranty coverage. It is interesting to point out that some 14% of plans have deductibles of $50, while almost 50% of plans have deductibles of $75. Some 20% of plans have a $100 deductible, while around 10% of plans have deductibles of $125 (Based on a Case Study).
Of the 86 home warranty policies evaluated in this case study, 42 of them slot into the $75 deductible range. Premiums also have wide ranging limits from $240 per annum on the low end to $1,100 on the high-end. In all of the 86 surveyed companies, the higher priced premiums are not associated with lower deductibles. In fact, several high-priced premiums have deductibles in the $100 – $125 range.
Experts Caution Against No Deductible Home Warranties
This begs the question: How should deductibles be evaluated? The quick answer is coverage. The better your coverage options, the more worthwhile it is paying a higher deductible, or even a higher home warranty annual price. A fine balance needs to be struck between the cost of a deductible, the cost of the plan, and the coverage offered. 36% of surveyed companies refuse to repair an issue after the deductible was paid, while 19% delayed repair work. Unfortunately, many customers (22%) complained of poor service once repair work was done.
Overall, deductibles comprised between 15% and 49% of the total cost of repair work for 38 of 58 reported cases. This indicates that the repair work done by the home warranty companies exceeded the cost of calling out a maintenance technician. The companies that offer $0 deductibles for their home warranty plans include: Complete Protection, UtilPro Appliance Repair, HomeServe USA, Stanley Warranty, Hi Tech Home Warranty, Certified Warranties, and AHPS Home Warranty.
Several of these companies have already had serious complaints of poor service or ‘sham services’ levied against them, and they do not rank highly with users at all. For starters, they are not well known, or represented well on search engines such as Yahoo, Bing, Google and Safari. Their $0 deductible and poor coverage plans largely discredit them with clients, despite their low cost appeal.