海角大神

Are home repair warranties worth the cost?

Is a home repair warranty ever worth the cost? In some scenarios, it can be worth it to have the extra peace of mind.

Say it鈥檚 the fifth day of temperatures over 98 degrees in South Carolina during a summer of record heat. Your air conditioning system has kept you cool through it all 鈥� until now. The unit is still spinning, but the air coming out isn鈥檛 cool. The temperature in your house starts to climb. What do you do?

If you are like most people, you Google 鈥淎C repair鈥� and start making calls. But you don鈥檛 want to pay service fees to three different companies just to come see what the problem is, so getting comparative estimates won鈥檛 work. Besides, the whole family insists they are 鈥渄ying鈥� from the heat. You quickly pick a company to fix the AC and that鈥檚 that.

Once you get through the AC crisis, you start to wonder if maybe you should get home repair warranty insurance. But is it a good deal?

My family has had a home repair warranty on our 28-year-old home for about 10 years. Initially it ran us about $300 a year with a $35 fee聽per repair visit. The premium and the visit fee increased every year until recently when I took the time to shop around and find a better deal. However, even with lower rates, looking at the math over the last 10聽years, the numbers alone don鈥檛 support the wisdom of that purchase. So why do I buy a home warranty?

Peace of mind

What the numbers don鈥檛 show is the peace of mind the warranty gives me. When something breaks, the home repair warranty company (let鈥檚 call it 鈥淔ictional Warranty Co.鈥�) sends a repair company to my house to fix it. I pay $45 each time I schedule a visit, but there is no cost for the rest of the repair.

I don鈥檛 think this saves us money on repairs overall, but I like the fact that Fictional Warranty Co. calls a repair firm (鈥淭he Repair Shop鈥�) and then monitors how much is charged. So if my refrigerator breaks, for instance, I am protected from Bob of The Repair Shop trying to inflate the price. Instead of telling me it will be $400, when it鈥檚 really only $200, Bob has to report the price to Fictional Warranty.

Fictional Warranty also helps me resolve a situation in which The Repair Shop doesn鈥檛聽do the work correctly, handling the additional cost and repairs on my behalf. Appliance and system repairs are rarely necessary at my house, so I don鈥檛 have a network of contractors I know and trust. But Fictional Warranty vets the companies for me, manages what is charged, and resolves any problems. That鈥檚 worth the yearly warranty cost to me.

Warranties get mixed reviews

But when I did some research, I found no consensus on whether home warranties are a good idea聽for older homes (all the sources I read said to avoid them for new homes).

recommends avoiding warranties because of the hundreds of dollars these contracts can cost. 鈥淚t makes much more sense to buy reliable products and maintain them as the manufacturer recommends,鈥� it聽says. Instead, Consumer Reports suggests placing the money you would have spent on a service contract into a or repair fund.

However, other personal finance experts also point to the added benefit of peace of mind, which can make a home warranty worth the cost for some people. And your personality and risk tolerance will, of course, factor into your decision-making, as will your existing network of repair companies.聽From a risk standpoint, if you typically avoid聽risk, you鈥檒l probably feel more comfortable knowing your maximum out-of-pocket yearly repair costs.

Also, if you don鈥檛 know much about appliance repair and don鈥檛 know whether to trust the repair companies in your area, you may like having a home warranty. On the other hand, if you are kind of handy and can do some , or you are confident you can find service providers you like and trust, you may want to forgo the warranty.

Shop around

If you decide you want a home warranty, shop around and compare options. Consumer Affairs provides a useful , costs and companies that offer home warranties. Call the companies you like and ask for the price of each home visit and the yearly cost. Then you can buy the warranty of your choice online or over the phone. Revisit your choice each year to make sure you keep getting the best deal.

聽is a certified financial planner and fee-only investment advisor with in Aiken, South Carolina.

Learn more about Kathryn on NerdWallet鈥檚 .

This article first appeared in .