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Do You Need Repair Insurance?

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by Eva Martinez
(Detroit, USA)

Unexpected repairs on home systems, vehicles, and major appliances can create a major financial disruption. As a result, a number of companies have begun offering home and automobile warranties. You pay an annual premium; then, when a breakdown occurs, you call the company to arrange for repairs.

Home Warranty Companies

There are dozens of home warranty companies, offering widely different features. Some only cover home systems (electrical, heating, air conditioning, plumbing), while others include all major appliances as well.

The annual premium for a typical home warranty is around $400, with a deductible (usually around $50) for each covered repair. The warranty companies advertise that they will repair or replace the system or appliance.

Common complaints include denial of coverage, repair delays, and repeated repairs to avoid replacement.

The warranty contract usually includes language to the effect that repairs due to misuse, neglect, pre-existing conditions, or lack of proper maintenance may not be covered under the agreement. Since some dishonest people wait until they know something is on the verge of breakdown to purchase the warranty, the repair person may feel that one of those exclusions applies.

This can be avoided by purchasing the warranty in a timely manner when moving into a new home, and keeping records to demonstrate proper maintenance.

Repair delays are another common complaint. Since the warranty company schedules the repair, there may be delays in scheduling. Another common complaint is that when parts are needed, they must be supplied by the warranty company instead of the repair person. Warranty companies respond that they can save on repair costs in this manner; however, it does delay repairs.

Finally, some companies are said to make repeated repairs in an effort to avoid replacement. The best way to avoid this is to choose your warranty company carefully. Read online reviews and check with theBetter Business Bureau for unresolved complaints.

Auto Warranty Companies

There are three basic types of extended auto warranties: extended manufacturer warranties, extended warranties from dealers, and independent extended warranties (mostly available online). They can range in cost from under $75 to over $3500, depending on the vehicle and coverage desired.

Like home warranty companies, auto warranty companies watch carefully for fraudulent claims. Statistics show that 90% of claims made in the first thirty days of the warranty are fraudulent, and many experts advise not filing a claim in the first sixty days, even if the claim is legitimate.

Only you can decide whether a home or auto warranty is worth the cost. On the one hand, you will have the peace of mind in knowing that you’re prepared for unexpected repair costs. On the other hand, you could bank the premiums and have your own emergency fund, with greater control (but more responsibility) for directing repairs.

Updated: September 20, 2013 — 10:06 pm

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