Having total peace of mind or … how buying a home warranty was the best decision I ever made

By Steven Lindsey

It’s 106 degrees outside and after five days of scorching heat, there’s no relief in the forecast for at least twice that long. A few margaritas, frequent dips in the pool and sleeping directly under an air vent become key to survival (or at least essential to staying comfortable, if I’m to be a little less dramatic). But what happens when disaster strikes in the middleof the night?

That’s exactly what occurred a few years ago one record-breaking July. The house my partner and I share isn’t large by most standards, but its high ceilings and open floor plan make it necessary for us to operate two air conditioners for several months of the year. So when we awoke in the middle of the night, drenched in sweat, it was not a good sign.

An arm raised up to the vent and the verdict was clear — the air conditioner was not cooling. Instead it was blowing like the hot, stale-coffee breath of an old man. Something was seriously wrong. We tossed and turned until morning and called for help. Within the day, a repairman fixed a compressor, replaced a spark plug or gave the whole system a rotate-and-balance (not really sure of the technical terms), and it was good as new. And for only $60.

That’s only because we had a home warranty, though Sharon Harrison, president of Nations Home Warranty, based in Dallas says “residential service contract” is a more accurate description.

Shortly after air conditioner No. 1 was repaired, air conditioner No. 2 went out and had to be completely replaced. No amount of oil changes or new shock absorbers was going to bring this one back to life. Two days later, we were the proud parents of a brand-new air conditioner. Retail value, $1,600.

It’s scenarios like these when a home warranty can really benefit a homeowner.

“Most people don’t budget for household repairs,” Harrison says. “We may set aside money for car repairs and health care, but generally people don’t wake up on Jan. 1 and decide to put money away for their homes.”

Harrison says the biggest ticket items that she has to replace are air conditioning and heating systems, but the worst repeat offender for her is swimming pools.

“I spend an exorbitant amount of money on swimming pools because water and motors don’t work nicely together,” she says. “When I look through my profit and losses at the end of the year it is always those blasted swimming pools. They’re always on the blink!”

So if you own a pool and don’t have a home warranty, it may be worth considering. At Nations, adding on a pool costs a mere $160 per year, which I can say from personal experience is less than even the most minor single repair to a pool.

For most people, a home warranty is included at the time they purchase a house, which is especially important when buying a pre-owned home.

According to Jenni Stolarski, a Realtor with Briggs Freeman Sotheby’s International Realty, “They’re not required, but I rarely see a contract come through that doesn’t have one. It’s one of those things that’s become de facto.”

In her experience, the only downside can be certain home warranty companies trying to always repair rather than replace, and that can get frustrating if the company seems unwilling to shell out the money for a new appliance, for example.

Harrison, however, is dedicated to keeping her customers for life and pledges to do whatever she can to make her customers happy.

However, people need to understand exactly what a home warranty does replace, whether using her company or another.

“Home warranty companies are responsible to repair or replace equipment that has broken. If there is damage that results from an appliance breaking, that is not covered. That’s where home warranties and homeowners insurance go hand in hand.”

And that’s a powerful combination for peace of mind. Last year, a pipe burst in one of the air conditioning units in our attic and damaged the ceiling and walls in three rooms of our house. The insurance agency covered the $20,000-plus in damages, but the home warranty came through to repair the actual air conditioning unit, which would’ve been an additional $700 out of pocket otherwise.

Some people may be tempted to drop their warranties after years of not needing them, but Eric Pratt, owner of Taddy’s Pet Services, has kept his home warranty service for 12 years and swears by it. His biggest replacement was also an air conditioning unit.

“Bingo!” he exclaims about the very expensive item he had replaced.

He says the only downside is paying for the warranty on the years when you don’t use it at all, but when you do need it, the benefit can more than make up for the difference.

“Just keep track of who they are sending out,” Pratt says. “Check out reports on the [service] company, if there’s bad reports, call your home warranty company and ask for someone else to do repairs. If there’s someone you have liked in the past, ask if the same vendor can help on the issue you are having.”

Finally, it’s important to note that home warranties don’t have to be purchased at the time of buying or selling a home. They can be obtained at any time and rates can be as low as $30 to $40 per month, but it’s important to read carefully what is covered so there are no surprises. Sometimes you need to add on a supplement for certain appliances, like washers and dryers, or those pesky pools. Termite and pest treatments can be options, as well as a green plan like Nations offers. Through that program, they’ll replace appliances with more energy efficient units, such as tankless water heaters to replace broken traditional water heaters.

Really, home warranties are as flexible as you need them to be. And for a little extra peace of mind when it comes to one of your most valuable assets, a couple dollars a day might just be worth the additional expense.

This article appeared in the Dallas Voice print edition March 4, 2011.