Appliance Insurance: Do You Need It?
For maximum financial protection, it is good to carry both appliance insurance as well as homeowner’s insurance. The bottom line is, you are most likely a great homeowner and take great care of it, but appliances naturally wear down over time no matter how great of care you have taken.
In many instances, homeowners do not have appliance insurance and do not even realize that such a home insurance rate has been created.
When we purchase our household appliances, they usually come with manufacturer warranties. As consumers, we think of these warranties as an insurance policy against our appliance. But warranties only last a little while and often cover only defects.
It is important to look at the concept of appliance insurance and to understand this financial protection product so you can make an educated decision on whether to carry a policy and how to structure it for your own protection.
Take a gander at these three tips on appliance insurance to help you pick whether to take advantage of this type of financial product and to find the best possible price on an insurance policy to suit your needs.
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KNOW THE IMPORTANCE OF APPLIANCE INSURANCE
People who are considering adding appliance insurance to their monthly home loan price or their overall insurance price need to consider the potential price versus the rewards offered by such a policy. There are quite a lot of possible examples that can explain the benefit of having your appliances covered.
One rather obvious example is in a heating and cooling system. Heating and Cooling units are not cheap to repair and even more expensive to purchase brand new. Having a good insurance policy in place in the event your HVAC breaks down can really save you some cash.
There are some renters who will correctly point out that purchasing any insurance plan limits their cash flow. For this reason, many would prefer to simply place the money they might otherwise spend on appliance insurance in the bank.
But at the same time, it is sensible to also acknowledge the possibility that for most of us, extra income just leads to extra spending. If your family tends to spend more when there’s more around, appliance insurance is actually a great idea because it represents a “forced savings” account preparing you for any appliance-related maintenance. At ac repair Scottsdale AZ you can find a good service.
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CHOOSE THE RIGHT INSURANCE PLAN
With that said, it is also important to convey that not every appliance insurance policy is the same. Renters and Homeowners thinking about buying their appliances properly insured should know what to look for in a fair policy.
Look over many plans from different providers to understand the right fit for you. People compare car insurance and health insurance all the time. Why should you not compare appliance insurance and save money like them?
As time passes and appliances get older, the possibility of failure skyrockets. Insurance that covers older appliances at a lower out-of-pocket cost to you is going to make more sense if your appliances have been around for quite some time. But in brand-new homes with all new appliances, this is not going to be much of an issue.
Based on your needs and your specific situation, choose a plan that makes the most sense. If you feel like there’s a great possibility of the need for or replacement in the not-so-distant future, look at policies with broad coverage and low deductibles.
If your things are newer and you just want to have a little extra coverage, you might be willing to pay more on a claim out of pocket in order to keep your insurance rate down.
When an appliance breaks down, in many cases it requires more than a little repair to get it working again. This is particularly true of appliances that are not as new.
Just finding the problem and procuring replacement parts can be quite an expensive task in itself. Solid appliance insurance is essential to keep these costs in line. When you have good coverage, you lean on the insurance provider to pay the major expenses, even up to full replacement.
Should I get appliance insurance?
“If you’re spending $800, $1,500 or $3,000 for an appliance, then it’s definitely worth getting one,” Triminio says. Others, though, don’t believe they’re worth the cost. … For example, warranties may run for as little as one year or extend up to five or more years, and cost less if purchased for a longer period of time.
As a general rule, the consumer doesn’t pay for a manufacturer warranty and the appliance will be repaired or replaced at no cost. A home appliance warranty works very much like an original manufacturer’s warranty, but you buy it from a company other than the manufacturer.
Most manufacturers offer warranties for appliances that last from three months to up to one year. After that, the manufacturer claims no responsibility if the unit breaks down, unless the customer purchased an extended warranty.
Most retailers offer extended warranties — also called service plans — at sales time. Some manufacturers, though, offer them throughout the first year before the original, manufacturer warranty expires.
Extended warranties vary in price and length of the contract. For example, warranties may run for as little as one year or extend up to five or more years, and cost less if purchased for a longer period of time.
Are extended warranties a waste of money?
Sometimes it’s not worth the extra costs, technicians say. If you buy a washing machine for $350, it’s not worth spending $200 on an extended warranty, says Triminio, a former salesman for a large appliance company. He also advises customers to be cautious of pushy salespeople.
“If I sold a $200 extended warranty, I would get $20 in commission,” he says of his previous experience as a salesman. “They’ll start pushing it and make you scared. They talk about how it could break down after a year. That’s the reason why some people buy them — they get scared.”
Wright says he comes across few broken appliances during home inspections, except in foreclosed homes. “Any appliance can fail suddenly but most will give warning signs that they are having problems such as unusual noises,” Wright says. “Furnaces and air conditioners could be appliances where a warranty might make sense as they are expensive to replace and not always obvious that something is wrong.”
Service plans often come with fine-print exceptions that could cause a company to deny a claim, according to a Consumer Reports article. The same report also points out that appliances seldom break during the two- to the three-year period after the manufacturer’s warranty expires and the service plan is in effect.
What is the best home appliance insurance?
Best Overall: Choice Home Warranty. Best for Major Kitchen Appliances: Complete Protection. Appliance Only Plans: American Home Shield. Best for Basic Plans: TotalProtect.
Purchasing a home warranty, though, can help alleviate some of the financial burden new homeowners face when a major appliance or home system goes out. Yes, you’ll pay for a warranty upfront but the savings could be worth the added expense.
What types of extended warranties are best?
Two types of extended warranties are typically available for large appliances: One offered by the manufacturer and one offered by a third-party company. Triminio cautions consumers to be wary of third-party warranties.
“The benefit of getting an extended warranty through the manufacturer is they’re in the business to fix appliances,” he says. “If it’s through a third party, we’ll likely have to buy parts for it and send another company to diagnose the problem.”
Triminio adds it’s harder to deal with third parties because technicians often have to call a 1-800 number and take several questions over the phone from an operator who works for an insurance company. He says customers also have harder times working with third parties.
“Working through the manufacturer is a smoother process,” he adds. “The manufacturer treats the process as a normal claim.”
Home Appliance Insurance – Who Needs a Home Warranty?
So there I was, sitting in my townhome with beads of sweat dripping off of my nose, and I had no idea that home appliance insurance existed.
I was twenty-three years old and had just bought my first home and BAM, my air conditioner quit on me. Just the night before, I had a party at my house and everyone was complimenting me on the purchase of my home and saying how responsible I was and how they were so jealous. But they weren’t thinking about my house being nearly twenty years old.
So what happened to my AC and how was I going to get it fixed?
Well, the fact was, I didn’t have an air conditioner. I had a heat pump, but all that I knew was that I needed to get it fixed quickly. I lived in the DEEP south so having an air conditioner is not just a convenience, it’s a requirement. Trust me.
My heat pump compressor failed so that meant that the whole unit had to be replaced. And how much did it cost? It cost a total of about fifteen hundred dollars.
But keep this in mind, that was over fifteen years ago! A repair or replacement of a heat pump today could cost easily over $5000. if 16 SEER means anything to you, you know what I am talking about.
So who needs a home warranty?
Well, I’ll tell you one thing, I sure needed a home warranty when my AC quit on me. The fact was, at the time, I could have bought one for about two hundred dollars.
So what lesson did I learn? Every house that I have bought since that time has been purchased with some sort of home warranty or appliance repair insurance. It’s as simple as that.
Does everyone need to buy this type of insurance?
Nope. Not at all. Let me explain myself. If you have purchased a brand new home, then you certainly do not need a home warranty. Here’s why. If you buy a house that is newly built then you will be covered by a contractor’s guarantee.
We are not talking about a wink and a handshake here. A contractor’s warranty or guarantee is mandated by law in many states to protect consumers.
So what is the moral of the story?
If you purchase a brand new home, a home warranty may not be your best option. But if you are thinking about buying a home that is twenty years old, then home appliance insurance could save you a few thousand dollars and give you peace of mind.
Does Homeowner’s Insurance Cover AC Repair?
This is a question that is often asked. Homeowner’s insurance does cover some AC repair costs, but this is only in the event of some kind of disaster. If your basement floods, your insurance may cover it.
If you have an outside air conditioner, and it’s struck by lightning, or a tree falls on it, it is probably covered. Homeowner’s insurance usually covers a major catastrophe, but not general repairs or malfunctions.
However, there is other insurance coverage that does pay for AC repair, as well as other major appliances in your home. This is called Appliance Insurance and can be purchased from the same company that offers homeowner’s insurance. What does the appliance insurance cover?
While each policy is different depending on the amount of your deductible, this insurance covers all your large appliances in the home.
It covers your heating and air conditioning systems, refrigerator, hot water heaters, and even things like dish and clothes washers. If you own your home, you should be getting this insurance.
How much you will actually pay out of pocket for these repairs really depends on your deductible. If you opt for a higher deductible, then you will have to pay more, a lower deductible, you will pay less, or not at all.
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There is a fine balance between having a high deductible. If you live in an area where you are using your air conditioner all the time and may have a higher risk that your unit will break down, getting a deductible that is low will be more convenient.
It will also be beneficial if you happen to wake up in the middle of the night because you need something repaired right away. Paying a higher premium on your major appliance insurance really depends on what you can afford, and how much you want to pay yourself.
While some AC repair costs are small, other problems may be quite expensive, and depending on how old your unit is, it may not be covered by the warranty. If you can afford to pay a higher premium, it is a good idea to get the best coverage possible. The newer your air conditioner is, the easier and cheaper it will be to get insurance for it.
How much you can expect to pay for AC repair really depends on the actual problem, how old the system is, and it may be a wise idea to get insurance to cover these costs. Before you go and run out and get appliance insurance for your AC, you should still check with your homeowner’s insurance policy to see exactly what it covers, and what it doesn’t.
If you use the same company, you may also get a blanket insurance policy, or even discounted premiums for using the same insurance agent for multiple policies. It may also be a good idea to look around for appliance insurance anyway, in case your company doesn’t offer this coverage, or their policy is more expensive.
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Compare Domestic Appliance Insurance on Washing Machines
If you have a home domestic appliance and need to take out insurance to cover repairs or replacements then surprisingly there is not a huge range of insurance companies out there that will cover you.
If you are buying new from the shop that you purchase your domestic appliance from will often encourage you to take out an extended warranty to cover breakdowns in the future.
At the time of purchase, you won’t have access to the internet to compare the price that you are being offered so think ahead, plan ahead and have some prices in mind before you purchase an extended warranty.
The main companies offering domestic electrical insurance are British Gas, Argos, Domgen, and WarrantyDirect.
An example of electrical insurance prices for cover on a washing machine breakdown is £8.25 per month from Domgen compared to £14.75 from British Gas which covers up to three kitchen appliances.
This is the price for a new customer, suggesting that the following year the premium could well be higher. WarrantyDirect offers a similar, three-item policy for just under £8.00 per month.
The items must be under eight years old, but this seems good value as it offers a replacement if your item can’t be fixed, unlimited repairs up to £2000, and the option of adding more items up to eight items altogether.
Argos offer a breakdown cover insurance valid for three years priced according to the cost of your washing machine. If you have a washing machine that costs between £230 and £349.99, a four-year breakdown cover will cost you £121.99. The insurance policy is underwritten by Allianz.
Most of us have at least three electrical items in our house worth taking out breakdown cover for such as the washing machine, dishwasher and tumble dryer, or television.
By thinking ahead and taking out domestic appliance insurance before any breakdown cover occurs, you could save yourself quite a bit of money…
How do I know if my appliance is under warranty?
No matter what brand your appliances are or how well you care for them, they are bound to break down sometime.
You might have noticed that when you go to schedule your service, there’s an option to check a box that says, “My appliance is covered by a manufacturer’s warranty or service contract.”
This has you wondering: what’s the status of your appliance warranty? If it’s still valid, you may have the option of fixing or replacing your appliance at no cost to you.
Remember, if you attempt a do-it-yourself repair while your appliance is under warranty, you may void whatever coverage you have remaining.
This means if the machine breaks down again in the future, you won’t be able to utilize the appliance warranty to help cover the cost.
Don’t wait until there’s an issue to make a note of the warranty guidelines for your appliances! Here’s how to tell if your appliance is under warranty.
Consider Typical Warranty Periods
If your appliance breaks down within 30 days of purchase, you can be certain it’s still under warranty. In fact, the store you bought it from may accept an exchange or return. Call to inquire about the store’s return policy to make sure.
Most manufacturers offer a 1-year warranty, so if it’s been less than 12 months since you purchased the appliance, it’s most likely still covered.
Check Your Receipt or User’s Manual
Generalities are useful for determining whether even to bother looking for the receipt or user’s manual. Just remember, even if it’s been over a year, you may have purchased an extended warranty or other insurance services.
The best way to find out for sure is to check product documentation. This is why it’s important to hold onto receipts and user’s manuals for major appliances and other high-ticket items.
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Check the Manufacturer’s Website
If you can’t find the paperwork for your appliance purchase, the manufacturer’s website is the next best place to look.
Here, you can verify the length of the limited warranty and discover extended warranty information. This may jog your memory if you’re trying to recall whether you purchased extended coverage or not.
Contact the Retailer
To retrieve specific details about your transaction, try contacting the retailer. You can also ask about customer rewards programs you might be a part of that provide an extended warranty or return period.
Look into Your Credit Card’s Consumer Protection Package
Did you purchase your appliance with a credit card? Many credit card companies offer free extended warranty coverage up to one year past the manufacturer’s warranty period as part of their consumer protection package. Contact your credit card company to learn if this applies to you.
What appliances does American Home Shield Cover?
Items available for home warranty coverage may include kitchen appliances, clothes washer and dryer, and the major components of central air conditioning systems, central heating systems, plumbing system, and electrical systems. Many of these items are covered based on the home warranty plan that you choose.
An American Home Shield® Home Warranty Plan covers many of the repair and replacement costs of over 20 of your home’s major appliances and system parts when they break down due to normal wear and tear. With several coverage options to choose from, we’ve made it simple to pick the plan that suits your family best.
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Conclusion:
When looking for a good home warranty program, which benefits and details are important to you? One of the first things that many people think about is how much the premium will be.
Although this is very important, you should be careful to make sure that you are considering all of your options. I have held home appliance insurance for many years now and hopefully, I will be able to give you a few pointers on choosing the best one for you.
The first thing that you should consider is how much coverage you need. The basic question that you need to ask yourself is how much risk you are willing to take.
If you have a brand new home, you are probably willing to take a lot more risk than someone living in a 25-year-old house with an aging heat pump or furnace. The level of risk that you feel comfortable with is the basis for deciding on any insurance policy.
For example, if you feel comfortable with fixing small things around the house like leaky faucets or even a broken garbage disposal, then you would probably feel okay with having a policy that does not include small appliances and the like.
But many homeowners want the peace of mind knowing that they don’t have to worry about how and when their appliances will get repaired if they have a breakdown.
Another thing to consider is the cost of a repair of a particular appliance. Many of the insurance policies will cover small things like microwaves.
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If you have a small stand-alone microwave, then the replacement cost will be very minimal these days. But on the other hand, if you have a built-in microwave that functions as a ventilation hood and lighting for your cooktop, then the replacement costs could be substantial.
Believe it or not, there are so many appliances and systems in your home that you can repair or replace yourself with very little know-how.
If I have a problem with something, I always Google it to see if I can fix it myself. Many of the mega home improvement warehouses are also a wealth of knowledge for the do it yourself repair person.
Here is the main reason why people feel that they need to buy a home warranty; the fear of having to replace or repair their HVAC system.
Replacement of your heat pump or air conditioner could cost several thousand dollars. The risk of having this type of failure is more than people want to deal with.
That is where these types of home warranty programs offer peace of mind and will serve you well.
FAQ
- What actually is home appliance insurance?
- How does home appliance insurance work (is it complicated to get payouts)?
- How much you should expect to pay each month?
- Any tricks to save money on your monthly bill?
- Is it even worth it to have this coverage?
- Which companies provide the best home appliance insurance coverage?
