This is a Devil's Advocate post.
This DA suggestion comes by way of Foobarista, whose neighbor recently had their furnace fixed “for free.” A home warranty is a warranty on the appliances and mechanical systems of your home, such as a furnace, and is most often offered for the first few years of a home and most people suggest that you don’t get it because of its cost. When you consider what can possibly break in your home and how much the deductible is, there aren’t going to be many things breaking that the warranty will cover. It will, however, become useful if something catastrophic happens which is the point of insurances anyway, right? So, why should you get a home warranty?
You’re Likely Cash Strapped Right After Closing
It’s very likely that you won’t have a lot of cash on hand right after closing because you’ll put as much as you can towards the initial downpayment, so it’s crucial that you get some sort of protection if there’s a larger than marginal chances something bad could happen. Now, if all of your appliances are brand spanking new and the building is brand new, you can probably skip on the warranty. If you have a 15 year old water heater or a 20 year old HVAC, you might want to consider the relatively small cost of the home warranty as a hedge against a bad situation. Now, a busted water heater or failing HVAC isn’t a hazardous situation (you can work around both of those), but imagine if your roof collapsed or if you discovered termite infestation missed by the inspector – now you’re talking dangerous situations you need to have resolved ASAP (assuming the warranty covers it). Different warranties cover different things, so if you do get one, be sure to double check what it covers.
Peace Of Mind Is Priceless
You might say that this is what the insurance companies want you to believe, that you’re not buying insurance but instead buying peace of mind and you’d be right – it’s what insurance companies say but it doesn’t make it untrue. Some people worry more than others and for those folks, insurance buys them peace of mind and likely a few more years in their life, don’t discount that. Peace of mind is a wonderful thing when you don’t have it and if you can get it on the cheap, by all means get it!
Remember, this is a Devil’s Advocate post so the conventional wisdom says you don’t want a home warranty (the deductible is killer! $100 deductible is huge when your payouts are counted in the hundreds) so do your research, I just wanted to offer up the other side for debate.