Like with anything valuable to you, insuring it is a smart thing to do. You insure your car, your health, your home… So, it’s rather strange that insuring the core systems and expensive appliances in a home is not the norm. After all, you literally use these systems more than anything. Without hot water or a fridge, you are immediately dealing with a third world situation.
It’s not just that people choose against such insurance knowingly – many of us do not know they even exist.
The cost of buying a home
Buying a home is possibly one of the most overrated investments there is. On paper, it may just be the worst investment there is. It takes ages to buy a home, it’s illiquid, it costs a huge amount to buy/sell, it costs a ton each year to maintain, you pay a lot of interest on a mortgage, its high price means you can’t diversify the investment well.
The only reason why we put up with these negatives is to avoid paying rent, hope the value increases and eventually have no mortgage. Fair enough, and whether it’s worth it or not is up for debate and circumstances of the market. But the key issue here is maintenance payments. The 1% rule suggests that you should expect to pay 1% of the value of the house in maintenance, per year. For a $500,000 house, this is $5,000 annually – some even suggest 2% which is $10,000. Most Americans do not have this amount of money spare in savings. If you do, and all of your appliances and systems are brand new with a long shelf life, then perhaps a home warranty is not for you.
For the rest of us though, this is not the case, and home warranties can offer us some protection on these extortionate costs of owning a home.
Target audience of home warranties
Income and savings
Generally, it is those of us who do not have a lot of savings to cover the possibility of major breakdowns. At the other end of the scale, those who cannot afford even the monthly premiums of home warranties may just suffice with second-hand replacement of broken appliances.
There is a scenario in which home warranties are still desirable for those with a lot of savings. This is when appliances or systems of old or prone to breaking down all in one short space of time, meaning that the monthly premium plus the deductible will be much smaller than the price of replacing these yourself.
Age and skill set
For those who are too old to be able to perform DIY, or perhaps you cannot get to grips with manual work, then home warranties are aimed at you in particular. If you’re a highly skilled plumber with friends in other trades, then it’s possible that you can get by with cheaply fixing your own home in the event of breakdowns.
The true value of home warranty is that they send out a skilled technician imminently after a breakdown. This technician will quickly fix the problem with no issues, much faster than the layman person. Sorry to contradict the earlier point, even high earners with lots of savings but little time can benefit from home warranties.
Home warranties that are available in Florida
When browsing the internet for home warranties, many companies you come across will not be operating in your state. Fortunately, Florida is one of, if not the cheapest states for home warranty premiums. The average premium is $317, drastically lower than the $616 average.
There are few large companies that operate across the entire America. Here is a list of best choices for Florida residents – companies that operate in Boca Raton:
- American Home Shield – $75 – $125 deductible
- THE HOME SERVICE CLUB – $75 deductible
- SELECT HOME WARRANTY – $60 deductible
- CHOICE HOME WARRANTY – $60 deductible
- AMERICA’S PREFERRED HOME WARRANTY – $50 – $125 deductible
- TOTAL HOME PROTECTION – $45 – $60 deductible
- FIRST AMERICAN HOME WARRANTY – $75 deductible
- HSA HOME WARRANTY – $75 – $100 deductible
Senior citizens get an extra benefit of signing up to home warranty. Instead of having to worry about all those phone numbers and finding the right tradesman for the job when something goes wrong, home warranties serve as a focal point of contact for all repairs.
Imagine the relief. One phone number, open 24/7. It’s just so easy. No matter whether it’s the fridge that breaks or the hot water is not working, they will find the right technician and organize them to fix the issue.
Not to mention that senior citizens tend to be less capable to repair things themselves, or endure the stresses of appliances failing. If my hot water goes off, I can drive to my parents for a shower. If my oven breaks, I can improvise with a quick trip to the shop to get a frozen, heatable meal. Older citizens do not wish to improvise. They want security.
Home warranties, however, pose as much of a threat as they do a security to the vulnerable. Senior citizens tend to be more vulnerable to the plethora of home warranty scams that exist today. Whether it’s small companies denying claims unfairly or large companies being pushy in their sales techniques. It’s difficult to sift through as some companies have proved to even post fake testimonials on their website.
The best way to navigate around this is to begin the contract on a monthly rolling basis, if possible. This allows senior citizens to switch to a less pushy company if they start to get a bad feeling about it. It’s also important that online reviews are made use of. There are way more customers out there than there are companies. The customers’ voice as a collective is thus way more valuable, and speaks volumes. Online reviews sites should be able to give the best indication of customer service, as it’s based on the experiences of hundreds if not thousands of examples.