Home warranties can be a boon if they are used wisely or become your darkest nightmare if you don’t follow a genuine plan to repay the home warranty amount. But while you are probably thinking about getting a home warranty, we want to know if you have a basic idea about – What is the real cost of a home warranty? Well, the fact is that most home warranty companies do a very good job in concealing the costs of their warranty plans from their clients and instead provides them with baffling information. Thus, we thought that having a comparative study of all the available home warranty costs and the other related aspects such as fees, services, etc. would be greatly helpful. Below is the result of our findings that will help you to understand about home warranty costs and also choose only the best home warranty plan for you without having to pay extra costs for your basic needs.
For home buyers, home warranties are a very popular and easy option to buy their home, mostly due to the offered coverage, peace of mind or convenience that is offered by them. However, very few people are really aware about the actual costs of home warranties. In our detailed and complete survey that included 14,000 plans and other plan variations, we found the average cost of a basic home warranty plan to be around an approximate amount of $600 annually. In this given report, we have summarized about the several valuable factors related to home warranties that affect the price of home warranty plans.
Well, now that the basics are known, it’s time to think about the most important question related to home warranty plans: How much does a good home warranty plan cost? At the end, a product or a plan is only useful if it is financially affordable to the user.
In order to calculate the average price of a home warranty plan, we performed a survey and took a massive sample of 14,053 different home warranty plans and their variations.
From this data, what we understood was that a typical home plan costs a consumer around $600 annually. However, the average price of home warranty insurance may range from anywhere less than $49 to even greater than $2400. With the purpose to understand this large range of cost, the survey considered many aspects and variables that may have greatly affected the overall cost of these home warranty plans.
The huge cost range is not at all coincidental. In fact, there are numerous factors that affect the price of a home warranty plan, such as the plan type, geography, term, deductible, and especially the details of the house that is being warrantied. Here below, we will define the different factors that affect the cost of your home warranty plan.
Keeping geography apart, the home warranty plans offer several options themselves to their consumers, allowing them to choose from a comparatively wider range. In fact, even the same home warranty company offers a plethora of choices and options to choose from. Thus, the average home warranty cost depends on the plan that a consumer chooses for his home. Thus, in order to compare these costs, we divided the home warranty plans based on their types as there is no known contract for them. In this article, we will understand the different types of home warranty plans and their average cost. We will learn in depth on how the cost of a regular home warranty plan largely depends on the choice of the consumer.
For example, the cost of home appliance insurance is comparatively the lowest and has an average cost of $456. This type of plan is called the Kitchen-Laundry Plan or the Appliance Service Plan, and they cover only the home appliances. This is the only reason why the appliance insurance cost is the lowest of all other plans.
Likewise, a system plan that covers items such as plumbing, electric, air conditioning and also heating, costs a little more than the appliance insurance plans at $472. This is often called as the “X,Y and Z” Plan, where X, Y and Z are the different names of systems that are being covered by this home warranty plan.
When you check out the big and famous home warranty companies, you will come across the combination plans which are widely famous. These combo plans offer different levels of coverage to the consumers based on their needs. These levels are named as Basic or the Total coverage offers or the Gold and Platinum offers. The highest levels offer greater coverage for a higher cost.
The cost of combination plans is comparatively higher than a regular plan. The cost of an average Silver plan is around $502 while a Gold plan costs a little more higher than a Silver plan, costing $615. Likewise, a Platinum plan is the most expensive of all home warranty plans, with an average cost of $733 annually. Higher the cost, better the coverage offered by the plan to its consumers.
Another factor that affects the cost of these plans is whether the company offers a monthly or an annual payment. Every home warranty plan is offered different terms ranging from 1 month to 10 years. The short term plans are offered to the current home owners while the longer plans are offered to consumers with a new construction home.
The cost comparison of home buyer warranty plans that differ based on their monthly or annual payment methods which are further broken down for a proper analysis based on the length of their terms should be compared. From this comparison, it will be clear that the monthly cost of home warranty greatly differs from the annual payment. In fact on an average, the annual home warranty cost is $30 less than the monthly payment plan cost. Hence, this only means that the cost of one year home warranty plan will be comparatively much lower if otherwise is paid in a monthly format.
When we looked at all the available data, the average 1 month home warranty plans seemed to be much cheaper than the available 12 month plans. Some of these companies offer their consumers with a free promotional period of a month or two.
Apart from these, yet another crucial factor that was studied was the term length. For instance, you should consider how much a one year warranty costs against a longer period? How much will it cost from month to month?
The information here shows that the cost of home warranty plans that have more than 2 year terms, have an average cost of $205 which is actually very affordable compared to the other plans. These home warranty plans are mostly offered exclusively for the newly constructed homes.
The average home warranty cost for 1 year is about $641. The cost for the terms ranging from 13 and 24 months is almost the same, costing around $642. A one month warranty plans cost $567 annually which is the lowest average price of a 1 year home warranty plan as per calculations.
Deductible is also one other factor that greatly affects the average price of a home warranty plan (60$-80$ on average). Customers of certain home warranty plans pay a deductible, apart from the premium, under the plan for each occurrence. This can also be referred to as a Call Fee or a Service Fee.
When you compare the average cost and a home warranty deductible, you will see that the most expensive average, as it may be predicted, are the home warranty plans that need no deductibles at all. On the other hand, other plans mostly have deductibles ranging from $50 to $125, thus having an average cost ranging from $607 to $657.
Making comparisons like this makes absolute sense especially when considering the fact that these warranties are nothing but a type of insurance plan. Well, the home warranty insurance price is as such affected by very similar factors. The auto insurance plans and health insurance plans that have a zero or very low deductibles usually cost more, in fact at times more than their plans with higher deductibles.
The yearly home warranty cost gets impacted by the little amount of money that a consumer wants to pay for calling the services during the warranty period. Thus, when a consumer asks the question – “What is the Cost of a Home Warranty Insurance?”, they need to consider how all other insurances are priced as well.
From the survey performed, one of the most essential facts that we understood is how a simple aspect such as geography affects the cost of a home insurance plan, particularly the state where the home is located. Thus, the annual premium amount differs greatly mostly based on the state where the consumer lives.
American states like Florida, Washington and California have comparatively the lowest average cost for home warranties. Washington offers the lowest cost, with an average home warranty cost of $500 per year. Well, on the other hand, New York has the highest premium home warranty cost, followed by New Hampshire, Rhode Island, Connecticut and also Alaska. The average home warranty price in Alaska is unbelievable $706, the highest premium offered than all other states.
Also, location of the house is not always considered as a factor that affects the cost. There are some companies that offer home warranty plans at the same cost in all the states where they offer services. On the contrary, there are some companies that alter the costs depending on specific states or cities. There aren’t many companies that offer services in all the 50 states in America due to both, business and legal purposes.
Every state offers numerous home warranty options, however in the most expensive states, the entry point for the cheapest warranty plans is higher at $400. The upper end of the costs in these states is also higher. On the contrary, in the least expensive states, the companies allow the consumers an entry point at $249.
In Florida, a state that is considered the cheapest across the country, very little can go wrong with the home warranty costs. Out of all the states in the country, the houses in the power grid are the safest and most reliable of all. The temperatures here, never drop below the freezing point. Also, apart from the hurricanes, the homes there are is much better condition than that in other states and have very little issues. But, if the homes are in such great conditions, then why do these states have the most expensive home warranty plans? Well, the answer to these is the cost of providing home warranty in these states. The houses in Connecticut are very old and dated back to 1964, while in Alaska the temperature is always around the freezing point, thus raising many potential issues that need to be covered by the home warranty plans, which thus lead to their increased home warranty plan costs.
The number of companies offering home warranty plans in each state varies a lot. The least and also the most expensive states, Washington and Alaska have the lowest number of companies that offer home warranty services. Similarly, New York also lags behind in the number of home warranty options that are provided to the consumers. On the other hand, both Arizona and Texas have the highest number of home warranty options.
This provided data may not affect or rather influence the average home warranty cost, but it certainly does affect the number of choices that a consumer is offered to choose from.
How does the House Affect its Average House Warranty cost?
A huge part of this answer goes back to the main question – What is the cost of Home Warranty per year? But, that is not all. You still need to understand a part of this whole picture. Two factors, geography and the home warranty plan variables significantly contribute in calculating the average home warranty plan costs. But what we did not notice here is that, the house itself is a major aspect to the cost too.
Right from a trailer to a huge luxurious mansion, you can get a home warranty plan for both of them, irrespective of its age. But, living in an old house will certainly be more expensive than living in a new home.
For a new construction, the basic home warranty cost per year is $303 less than that of old homes.
Thus, while many consumers choose home warranty plans for protecting their homes, irrespective of its age, research results show that getting a good home warranty is much easier when the house is new. Well, in fact you can actually pre-purchase a home warranty for your new home and make it effective from the very day you move into your new home.
On the other hand for older houses, home warranty plans can be used by the realtors or current home owners as an incentive or an attraction to encourage the new buyers. However, the purchaser in this case should be smart enough to closely examine the meaning behind these incentives and whether they are good enough against the decision of buying an old house.
Another possibility of how the house affects the average cost of a home warranty plan is its relation to the type of house. Studies are made that indicate the different range of available annual premiums that are offered to the consumers of different types of houses.
The home warranty cost for a condo is comparatively less than that of single family houses and has an average cost of $453, while the cost is $505 for the single family houses.
Duplexes, triplexes and also fourplexes have the most expensive home warranties, where the average cost of a fourplex is $1228. However, what we understand here is that such houses are shared by many families, which only means that this home warranty cost gets equally split amongst them.
The square feet coverage of the house also affects the average premium cost of a house. Smaller homes that are less than 5000 sq.ft have an average cost of $686 per year. Bigger houses that are more than 5000 sq. ft have an average cost of $1116 annually. In simple words, you can find home warranties of all types for all kinds of homes. Research itself proves that there are companies that will cost differently based on these aspects.
However, you must consider both the age and the type of house you live in, as the two most important factors for calculating your home warranty cost.
Home Warranty Cost and its Dependence on Quotations
The home warranty purchase process is one of the most important components involved in buying a home warranty. According to our study, the difficulty of purchasing a home warranty is dependent on the number of questions asked to the consumers by the home warranty company, related to the average cost of the home warranty. So, for a proper understanding, quotations were requested from all the 34 home warranty companies that had taken part in the survey to better understand the difficulty of the entire process. Some of these companies gave us their instant “generic non-specific” quote, while other companies asked for a more in-depth detail about the house, such as the type of dwelling, sq.ft coverage and age of the house, before they offered us with their different options and their different costs.
Thus, more the questions or details asked by the home warranty company more the expensive annual premium costs. A home warranty company that asked no or just 1 question to their consumers will cost an average amount of $480 annually. On the contrary, a company that asks 4 or more questions to their consumers will have a higher per year premium amount of $725.
What consumers should understand here is that the home warranty purchase process is in itself a very important component for the companies and the different products they offer to their consumers. There is a possibility that the home warranty cost offered to a purchaser is comparatively much higher if the screening procedure is more intensive. So, when a consumer asks the cost of a home warranty, the consumer must also be aware of all the things that are asked of them. Detailed quotations of companies that promise to offer more options sometimes prevent the companies from providing the best rates to their consumers.
In this survey-report, we have summarized a range of factors that affect the average home warranty plan costs by studying more than 14,000 warranty plans and different options that are provided to the American buyers. Lastly, the home warranty price if in fact affected by several factors inclusive of geography, warranty plan options and also the type of house that is being insured.
So, when you are requesting for the average cost of a home warranty plan and are making the final choice, make sure to use the details offered here by the research and its report to help look through the innumerable warranty choices that are made available to you.