Should I buy a residential service agreement (i.e. home warranty)?

Technically termed a “Residential Service Agreement” (RSA), since the word “warranty” has specific legal meaning, a home warranty is a great opportunity for affordable peace of mind.

Home warranties are especially beneficial if you end up using them, like any warranty, but even if you don’t make a claim, you can think of it as an insurance policy against things going wrong.

Making A Claim

To make a claim, you call the service telephone number or use the company’s website. There is typically a $75+ service call fee per problem area.

For example, if you have 2 plumbing issues and 1 electrical issue, you’ll be charged 2 service fees.

If the problem is found to be under warranty (i.e. a covered item), the contractor will repair or replace it at no additional charge to you.

The contractors are chosen by the RSA company and are licensed, insured, etc. They are professionals and doing home warranty claim repairs is usually just one part of their business.

Let the contractor know up front if you’ll want them to do work in addition to what’s covered by the policy so they can schedule you for additional time and bring the additional materials and tools.

Renewing Your RSA

Because it often costs hundreds of dollars to successfully complete a long-term home repair, just one service call usually makes the home warranty pay off. Whether you do or not, you’re protecting yourself from having to dip into your savings if something big (that is covered) does come up.

Whether or not you make a claim, you can choose to renew your Residential Service Agreement each year. The price typically goes up after the first year, even if you don’t make a claim.

If you receive a lot of financial benefit from your year of claims (e.g. $10,000), you probably won’t be given the opportunity to renew with the same company.

However, even just having it for the first year, it can provide a safety net for things that may come up while you’re still getting to learn your new home.