Home warranties are one-year contracts that pay the costs of repairing or replacing home systems and appliances that fail due to wear and tear. A home warranty may be provided to homeowners when they buy their home or they can purchase a contract later. When a warranty expires, the owner has the option to buy an extended home warranty, which is the term used when a contract is renewed. When you consider renewing a home warranty, evaluate your needs to determine how extending the policy could benefit you.
A Renewal Is Not an Independent Purchase
You can shop around and compare vendors when you buy a home warranty. However, extended warranties are not independent purchases, they are original contracts that are renewed.
An Extended Contract is the Same as the Original
Nothing is automatically changed in an original policy when it is offered for renewal. Per Bob Vila, the coverage is precisely the same, and there are no added features unless you change the policy during the year. The service will be the same, and the amount paid per appliance or system will be unchanged.
However, some providers offer a renewal discount as an incentive. That means the new rate is lower, which can save the time and effort of shopping around for a better price.
Because a new, extended contract coverage will be the same as the original, review your policy to clarify details. Ensure you understand all terms and conditions before extending a warranty.
Evaluate Current Warranty Needs
Before renewing a warranty, review your current situation to determine whether you need to change coverage or cancel the warranty. Begin by evaluating your circumstances when you got the contract and how circumstances have changed since that time.
For example, some busy homeowners with little time purchase a warranty to help ensure their home will always be in good repair. Not only is the cost of preparing or replacing expensive systems and appliances covered, but arranging service is as easy as calling a provider. Per Investopedia, warranties also make sense for homeowners with costly appliances. Extending the contract is logical if this is still your situation when it’s time to renew.
A home warranty offers protection against unexpected expenses. Some home buyers purchase a home warranty because they have little cash after making such a significant investment. But, a year later, they may have saved enough to cover these costs.
Extending a warranty can make sense if a home is older and appliances are aging. Replacing systems like air conditioning or high-end refrigerators can quickly eat into savings.
Think About Altering the Coverage
Allowing a home warranty to renew automatically provides the same coverage, but a homeowner can change that. For example, if your original contract was comprehensive and covered most of your appliances and systems, you might consider renegotiating for a policy that pays only for specific items. That could be a wise option if you have enough savings to cover some repair expenses but not all.
Home warranties are annual contracts that cover the cost of repairing or replacing home appliances and systems. Homeowners can allow the contracts to renew and keep the same coverage or alter the agreement to suit changing needs.
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