Have you ever thought about doing a cash-out refinance on your home for investment?
A lot of people have.
I received exactly this question from a reader.
Reader Question
Hi Jeff,
Thanks for your videos and educational websites!
I know you are very busy and this may a simple answer so thank you if can take the time to answer!
Would you ever consider approving someone to taking a cash-out refi on the equity in their house to invest?
I have been approved for a VA 100% LTV cash-out refi at 4% and would give me 100k to play with.
With average ROI on peer to peer, Betterment, Fundrise, and S&P 500 index funds being 6-8%, it seems like this type of leveraging would work. However, this is my primary residence and there is an obvious risk. I could also use the 100k to help buy another property here in Las Vegas, using some of the 100k for a down and rent out the property.
BTW, I would be debt free other than the mortgage, have 50k available from a 401k loan if needed for an emergency, but with no savings. I have been told this is crazy, but some articles on leveraging seem otherwise as mortgages at low rates are good at fighting inflation, so I guess I am not sure how crazy this really is.
I would greatly appreciate a response and maybe an article or video covering this topic as I am sure there are others out there who may have the same questions.
My Thoughts
But rather than answering the question directly, I’m going to present the pros and cons of the strategy.
At the end, I’ll give my opinion.
The Pros of a Cash-Out Refinance on Your Home For Investment Purposes
The reader reports he’s been told the idea is crazy.
But it’s not without a few definite advantages.
Locking in a Very Low-Interest Rate
The 4% interest rate is certainly attractive.
It will be very difficult for the reader to borrow money at such a low rate from virtually any other source. And with rate inching up, he may be locking into the best rates for a very long time.
Even better, a home mortgage is very stable debt. He can lock in both the rate and the monthly payment for the length of the loan – presumably 30 years. A $100,000 loan at 4% would produce a payment of just $477 per month. That’s little more than a car payment. And it would give him access to $100,000 investment capital.
As long as he has both the income and job stability needed to carry the payment, the loan itself will be fairly low risk.
So far, so good!
The Leverage Factor
Let’s use an S&P 500 index fund as an example here.
The average annual rate of return on the index has been right around 10%.
Now that’s not the return year in, year out. But it is the average based on nearly 100 years.
If the reader can borrow $100,000 at 4%, and invest it and an average rate of return of 10%, he’ll have a net annual return of 6%.
(Actually, the spread is better than that, because as the loan amortizes, the interest being paid on it disappears.)
If the reader invests $100,000 in an S&P 500 index fund averaging 10% per year for the next 30 years, he’ll have $1,744,937.That gives the reader a better than 17 to 1 return on his borrowed investment.
If everything goes as planned, he’ll be a millionaire using the cash-out equity strategy.
That’s hard to argue against.
Rising Investment, Declining Debt
This adds an entire dimension to the strategy. Not only can the reader invest his way into millionaire status by doing a cash-out refinance for investment purposes, but at the end of 30 years, his mortgage is paid in full, and he’s once again in a debt-free home.
Not only does his investment grow to over $1 million, but over the 30 year term of the mortgage, the loan self-amortizes down to zero.
What could possibly go wrong?
That’s what we’re going to talk about next.
The Cons of a Cash-out Refinance on Your Home
This is where the prospect of doing a cash-out refinance on your home for investment purposes gets interesting.
Or more to the point, where it gets downright risky.
There are several risk factors the strategy creates.
Closing Costs and the VA Funding Fee
One of the major disadvantages with taking a new first mortgage are the closing costs involved.
Whenever you do a refinance, you’ll typically pay anywhere from 2% to 4% of the loan amount in closing costs.
This will include:
origination fees
application fee
attorney fee
appraisal
title search
title insurance
mortgage taxes
and about a dozen other expenses.
If the reader were to do a refinance for $100,000, he would only receive between $96,000 and $98,000 in cash.
Then there’s the VA Funding Fee.
This is a mortgage insurance premium charged on most VA loans at the time of closing. It’s usually added on top of the new loan amount.
The VA funding fee is between 2.15% to 3.30% of the new mortgage amount.
Were the reader to take a $100,000 mortgage, and the VA funding fee set at 2.5%, he’d owe $102,500.
Now… let’s combine the effects of both the closing costs in the VA funding fee. Let’s assume the closing costs are 3%.
The borrower will receive a net of $97,000 in cash. But he will owe $102,500. That is, he will pay $102,500 for the privilege of borrowing $97,000. That’s $5,500, which is nearly 5.7% of the cash proceeds!
Even if the reader gets a very low-interest rate on the new mortgage, he’s still paid a steep price for the loan.
From an investment standpoint, he’s starting out with a nearly 6% loss on his money!
I can’t recommend taking a guaranteed loss – upfront – for the purpose of pursuing uncertain returns.
It means you’re in a losing position from the very beginning.
The Interest on the Mortgage May No Longer be Tax Deductible
The Tax Cuts and Jobs Act was passed in December 2017, and applies to all activity from January 1, 2018, forward.
There are some changes in the tax law which were not favorable to real estate lending.
Under the previous tax law, a homeowner could deduct the interest paid on a mortgage of up to $1 million, if that money was used to build, acquire or renovate the home. They can also deduct interest on up to $100,000 of cash-out proceeds used for purposes unrelated to the home.
That could include paying off high interest credit card debts, paying for a child’s college education, investing, or even buying a new car.
But it looks like that’s changed under the new tax law.
Borrowing up $100,000 for purposes unrelated to your home, and deducting the interest looks to have been specifically eliminated by the new law.
It’s now widely assumed that cash-out equity on a new first mortgage is also no longer deductible.
Now the law is still brand-new and subject to both interpretation and even revision. But that’s where it stands right now.
There may be an even bigger obstacle that makes the cash-out interest deduction meaningless, anyway.
Under the new tax law, the standard deduction increases to $12,000 (from $6,350 under the previous law) for single taxpayers, and to $24,000 (up from $12,700 under the previous law) for married couples filing jointly. (Don’t get too excited – personal exemptions are eliminated, and combined with the standard deduction to create a higher limit.)
The long and short of it is with the higher standard deduction levels, it’s much less likely mortgage interest will be deductible anyway. Especially on the loan amount as low as $100,000, and no more than $4,000 in interest paid.
Using the Funds to Invest in Robo-advisors, the S&P 500 or Peer-to-Peer Investments (P2P)
The reader is correct that these investments have been providing steady returns, well in excess of the 4% he’ll be paying on a cash-out refinance.
In theory at least, if he can borrow at 4%, and invest at say, 10%, it’s a no-brainer. He’ll be getting a 6% annual return for doing virtually nothing. It sounds absolutely perfect.
But as the saying goes, if it looks too good to be true, it probably is.
I often recommend all of these investments, but not when debt is used to acquire them.
That changes the whole game.
Whenever you’re thinking about investing, you always must consider the risks involved.
The last nine years have somewhat distorted the traditional view of risk.
For example, the stock market has been up nine years in a row, without so much as a correction of greater than 10%. It’s easy to see why people might think the returns are automatic.
But they’re not.
Yes, it may have been, for the past nine years. But if you look back further, that certainly hasn’t been the case.
The market has gone up and down, and while it’s true that you come out ahead as long as you hold out for the long term, the debt situation changes the picture.
Matching a Certain Liability with Uncertain Investment Returns
Since he’ll be investing in the market with 100% borrowed funds, any losses will be magnified.
Something on the order of a 50% crash in stock prices, like what happened during the Dot.com Bust and the Financial Meltdown, could see the reader lose $50,000 in a similar crash.
But he’ll still owe $100,000 on his home.
This is where human emotion comes into the picture. Since he’s playing with borrowed money, there’s a good chance he’ll panic-sell his investments after taking that kind of loss.
If he does, his loss becomes permanent – and so does his debt.
The same will be true if he invests with a robo-advisor, or in P2P loans.
Robo-advisor returns are every bit as tied to the stock market as an S&P 500 index fund is. And P2P loan investments are not risk-free.
In fact, since most P2P investing and lending has taken place only since the Financial Meltdown, it’s not certain how they’ll perform should a similar crisis take place.
None of this is nearly as much a problem with straight-up investing based on saved capital.
But if your investment capital is coming from debt – especially 100% – it can’t be ignored.
It doesn’t make sense to match a certain liability with uncertain investment gains.
Using the Funds to Buy Investment Property in Las Vegas
In a lot of ways, this looks like the most risky investment play offered by the reader.
On the surface, it sounds almost logical – the reader will be borrowing against real estate, to buy more real estate. That seems to make a lot of sense.
But if we dig a little deeper, the Las Vegas market in particular was one of the worst hit in the last recession.
Peak-to-trough, property values fell on the order of 50%, between 2008 in 2012. Las Vegas was often referred to as the “foreclosure capital of America”.
I’m not implying the Las Vegas market is doomed to see this outcome again.
But the chart below from Zillow.com shows a potentially scary development:
The upside down U formation of the chart shows that current property values have once again reached peak levels.
That brings the question – which we cannot answer – what’s different this time? If prices collapsed after the last peak, there’s no guarantee it can’t happen again.
Once again, I’m not predicting that outcome.
But if you’re planning to invest in the Las Vegas market with 100% debt, it can’t be ignored either. In the last market crash, property values didn’t just decline – a lot of properties became downright unsalable at any price.
The nightmare scenario here would be a repeat of the 2009-2012 downturn, with the reader losing 100% of his investment. At the same time, he’ll still have the 100% loan on his home. Which at that point, might be more than the house is worth, creating a double jeopardy trap.
Once again, the idea sounds good in theory, and certainly makes sense against the recent run-up in prices.
But the “doomsday scenario” has to be considered, especially when you’re investing with that much leverage.
Putting Your Home at Risk
While I generally recommend against using debt for investment purposes, I have an even bigger problem when the source of the debt is the family homestead.
Borrowing money for investment purposes is always risky.
But when your home is the collateral for the loan, the risk is double. You not only have the risk that the investments you’re making may go sour, but also that you’ll put your home at risk in a losing venture.
Let’s say he invests the full $100,000. But due to leverage, the net value of that investment has declined to $25,000 in five years. That’s bad enough. But he’ll still owe $100,000 on his home.
And since it’s a 100% loan, his home is 100% at risk. The investment strategy didn’t pan out, but he’s still stuck with the liability.
It’ll be a double whammy if the money is used for the purchase of an investment property in your home market.
For example, should the Las Vegas market take a hit similar to what it did during the Financial Meltdown, he’ll not only lose equity in the investment property, but also in his home.
He could end up in a situation where he has negative equity in both the investment property and his home. That’s not just a bad investment – that’s a certified nightmare!
It could even lead him into bankruptcy court, or foreclosures on two properties – the primary residence and the investment property. The reader’s credit would pretty much be toast for the next 10 years.
Right now, he has zero risk on his home.
But if he does the 100% cash out, he’ll convert that zero risk to 100% risk. Given that the house is needed as a place to live, this is not a risk worth taking.
Final Thoughs
Can you tell that I don’t have a warm, fuzzy feeling about the strategy? I think you figure it out by the greater emphasis on Cons than on Pros where I come down on this question.
I think it’s an excellent idea in theory, but there’s just too much that can go wrong with it.
There are three other factors that lead me to believe this is probably not a good idea:
1. The Lack of Other Savings
The reader reports that he has “…50k available from a 401k loan if needed for emergency, but with no savings.”For me, that’s an instant red flag. Kudos to him for having no other debt, but the absence of savings – other than what he can borrow against his 401(k) plan – is setting off alarm bells.
To take on this kind of high risk investment scheme without a source of ready cash, exaggerates all of the risks.
Sure, he may be able to take a loan against his 401(k), but that creates yet another liability.
That that will need to be repaid, and it will become a lien against his only remaining unencumbered asset (the 401k).
If he has to borrow money to stay liquid during a crisis, it’s just a question of time before the strategy collapses.
2. The Reader’s Risk Tolerance
We have no idea what the reader’s risk tolerance is.
That’s important, especially when you’re constructing a complex investment strategy.
While it might seem the very fact he’s contemplating this is an indication he has a high risk tolerance, we can’t be certain. He’s basing his projections on optimistic outcomes – that the investments he makes with the borrowed money will produce positive returns.
What we don’t know, and what I ask the reader to consider, is how he would handle a big reversal.
For example, if he goes ahead with the loan, invests the money, and finds himself down 20% or 30% within the first couple of years, will he be able to sleep at night? Or will he instead contemplate an early exit strategy, that will leave him in a permanent weakened financial state?
These are real risks that investors face in the real world. At times, you will lose money. And how you react to that outcome can determine the success or failure of the strategy.
This is definitely a high risk/high reward plan. Unless he has the risk tolerance to handle it, it’s best not to even start.
On the flip side, just because you have the risk tolerance, doesn’t guarantee success.
3. Buying at a Market Peak
I don’t know who said it, but when asked where the market would go, his response was “The market will go up. And the market will go down”.
That’s a fact, and one that every investor has to accept.
This isn’t about market timing strategies, but about recognizing reality.
Here’s the problem: both the financial markets and real estate have been moving up steadily for the past nine years (but maybe a little bit less for real estate).
Sooner or later, all markets reverse. These markets will too.
I’m worried that the reader might be borrowing money to leverage investing at what could turn out to be the absolute worst time.
Ironically, a borrow-to-invest strategy is a lot less risky after market crashes.
But at that point, everyone’s too scared, and no one wants to do it. It’s only at market peaks, when people believe there’s no risk in the investment markets, that they think seriously about things like 100% home loans for investments.
In the end, the reader’s strategy could be a very good idea, but with very bad timing.
Worst Case Scenario: The Reader Loses His Home in Foreclosure
This is the one that seals the deal against for me. Doing a cash out refinance on your home for investment is definitely a high-risk strategy.
Heads you’re a millionaire, tails you’re homeless.
That’s not just risk, it’s serious risk. We don’t know if the reader also has a family.
I couldn’t recommend anyone with a family putting themselves in that position, even if the payoff were that high.
Based on the facts supplied by the reader, we’re looking at 100+% leverage – the 100% loan on his house, then additional (401k) debt if he runs into cash flow problems. That’s the kind of debt that will either make you rich, or lead you to the poor house.
Given that the reader has a debt-free home, no non-housing debt, and we can guess at least $100,000 in his 401(k), he’s in a pretty solid situation right now. Taking a 100% loan against his house, and relying on a 401(k) loan for emergencies, could change that situation in no more than a year or two.
As a renter of a home or apartment, you may be considering whether it’s worth the cost to purchase a renters insurance policy. Renters insurance is a type of coverage that is designed to provide financial protection for your personal property in your rental unit, and it also provides coverage for your liability exposure, should someone become injured on your property. And, the good news is that this type of coverage offers you extra protection, purchasing renters insurance generally won’t cost you a ton of money.
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On average, renters insurance costs about $174 per year as of 2022, according to the Insurance Information Institute (Triple-I). And, much like the right auto insurance policy, renters insurance can be an invaluable part of your financial plan. That said, you may be wondering what is covered under renters insurance, and what may not be covered under this type of policy. By understanding your renters insurance coverage, you may feel more comfortable with your policy and more in control of your finances. Here’s what you should know.
What does renters insurance cover?
Your renters insurance policy provides several areas of coverage and may be able to be customized to fit your unique needs. The coverages discussed here are fairly standard, but all renters insurance companies are different. Checking with your agent regarding the specific coverages included on your policy may be a good idea.
With these coverages, you will first pay a deductible as determined in your policy before your insurance provider helps cover costs.
Liability coverage
Liability coverage is designed to provide financial protection for you if someone is injured on your property. It could also help pay for attorney fees and legal representation. In fact, your liability coverage may even extend to injuries you are found at fault for that occur off of your premises, such as your dog knocking down a neighbor while you are on a walk.
Liability coverage is an integral part of a renters insurance policy. Most companies offer liability coverage starting at $100,000, although $300,000 and even $500,000 are not uncommon coverage levels. These amounts may seem high, but if someone is injured and sues you, the bills can add up quickly.
Personal property coverage
Personal property coverage is the backbone of a renters insurance policy. Because your landlord is responsible for the structure of your rental home or apartment building, a renters insurance policy does not include dwelling coverage like a home insurance policy does. However, you are responsible for your personal belongings, like your clothing, furniture and electronics, and that is where renters insurance comes in.
Renters insurance policies cover your personal belongings on a named peril basis, meaning that your belongings are only covered for certain situations. The named perils most commonly included are:
Fire or lightning
Windstorm or hail
Smoke
Vandalism
Theft
Damage caused by the weight of ice, snow or sleet
Damage caused by the accidental discharge of water or steam from a household appliance, or from a plumbing, heating, air conditioning or sprinkler system
Damage caused by the sudden and accidental cracking, burning, tearing apart or bulging of a steam or hot water heating system, air conditioner or sprinkler system
Damage caused by the freezing of a household appliance or plumbing, heating, air conditioner or sprinkler system
Damage caused by a sudden and accidentally generated artificial electrical current
Keep in mind that these perils only refer to your personal property. If your ceiling caves in after a heavy snow, for example, your renters insurance policy will help pay for the damage to your belongings, but your landlord’s policy will pay for the damage to the building itself.
Actual cash value vs replacement cost
Typically, you will have a choice between two types of personal property coverage on a renters insurance policy: actual cash value or replacement cost. You may even have a third option, called guaranteed replacement cost coverage. These will determine how your coverage applies after the deductible is taken into account.
Actual cash value (ACV) coverage will pay to replace your belongings at their depreciated value. For example, if you purchased a TV for $1,000 and it loses 10% of its value each year, after five years it will only be worth $500. If your TV is damaged, your insurance claims adjuster will calculate the depreciation to determine how much to pay you for it. More or less depreciation may be taken out depending on the condition of the TV. ACV policies are typically the least expensive option.
Replacement cost coverage will pay you the amount it will take to replace your damaged or destroyed items with comparable new items. For example, even if the TV in the example above is five years old, a replacement cost policy will give you the $1,000 that it would take to buy a similar new TV. Replacement cost policies are typically more expensive than ACV policies since they agree to pay you a higher amount.
Guaranteed replacement cost takes things a step further. If your damaged or destroyed items cost more than the original value to replace, a guaranteed replacement cost policy will pay the higher amount. If it would take $1,500 to replace your damaged TV, even though you only paid $1,000 for it when you purchased it, a guaranteed replacement cost policy should pay the $1,500. Guaranteed replacement cost typically costs the most of these three options, and may not be available from every company.
What does renters insurance not cover?
Although renters insurance offers a good amount of financial protection for its relatively low cost, not everything is covered. Some common exclusions on renters insurance policies include:
Flood damage: If you live in an area prone to flooding and are worried that your personal belongings could be damaged in a flood, you may want to consider a separate flood insurance policy.
Earthquake damage: You may be able to add earthquake coverage to your policy by endorsement. If you live in an area of the country where earthquakes are common, you may need a separate policy.
Damage caused by pests: Because it is your landlord’s responsibility to maintain your rental home or apartment building, pest damage, even to your personal belongings, is usually excluded from a renter’s insurance policy. If your landlord is found negligible for allowing a pest infestation, the liability on their landlord insurance policy should cover your damages.
Damage to or the theft of your vehicle: To get coverage for your vehicle, you need to have auto insurance. Your personal belongings may be covered under your renters policy if they are stolen, but the car itself or any damage to it is never covered under a renters insurance policy.
Your roommate’s belongings: Unless you and your roommate have a joint policy where you are both listed as named insureds, your roommate’s belongings are not covered under your renters insurance policy.
Damage in excess of your policy limits: If you have a renters insurance policy, you should consider how much coverage you need to replace your belongings. Your liability coverage will also only pay up to the limit you choose. However, damage you cause to the unit or injuries you or your family sustain are not covered by renters insurance.
Every renters insurance company is different, so talking to your agent is the best way to determine what is and is not covered by your policy.
What customizations can you make to a renters insurance policy?
Renters insurance policies often come with endorsements that you can add to customize your coverage. Common endorsement options include:
If you are not sure how much renters insurance you need or what coverages to choose, talking to a licensed agent may help you to decide on policy options that are appropriate for you.
Frequently asked questions
Deciding which renters insurance company is right for you can depend on a range of personal factors and preferences. There are numerous renters insurance companies on the market, and one of the best ways to find coverage that fits your needs is to request quotes from several companies. This lets you compare the available coverages, discounts and price before making a decision on a policy.
Your renters insurance policy may extend your liability coverage to cover injuries that your pet causes to others, although there are certain dog breeds that are frequently excluded from coverage. Exotic pets may also be excluded. If you are looking for health insurance coverage for your pet, you will need to purchase a pet insurance policy.
No, your renters insurance policy will not pay for your medical bills if you hurt yourself. Your renters insurance medical payments coverage only applies to your guests, and your liability coverage only provides financial protection for injuries and damages that you are found at fault for. If you are injured on your property and your landlord is found at fault, their landlord insurance may provide coverage for your medical bills. Otherwise, you would need to have health insurance to cover your injuries.
A home warranty plan is an ideal investment for homeowners looking to protect their purchase and to ensure that every aspect of their home is kept running smoothly and efficiently.
A warranty differs from a homeowners insurance policy, though the two do have similarities.
The latter is usually designed to protect against any theft from the property, as well as damage which occurs as the result of natural causes such as flood, fire, or storms.
A home warranty, on the other hand, attends to the mechanics and appliances which reside within that home, such as plumbing and heating systems, washer, dryers, and stoves.
Sears is one popular option for home warranties, and it may be worth your consideration. In this review, we’ll examine its coverage and cost and weigh the pros and cons of protecting your home with the company.
Home Warranties: Here’s How They Work
A warranty for your home works in a similar way to a traditional home insurance policy.
You pay a certain monthly amount, and in return be covered if an appliance or system requires a replacement or repair.
Most providers will offer a variety of plans which are designed to suit the lifestyle of the policyholder, and Sears is no different.
Who Needs a Home Warranty?
Although home warranties are not compulsory in the same way that home insurance policies can be for some mortgage providers, they are nevertheless a good idea for any homeowner.
Investing in property is a substantial financial commitment, and it is a good idea to protect this investment in the best way you can; by having secure, financial protection and cover.
You also get the peace of mind that things can be repaired and replaced if they go wrong, without costing you an excessive amount.
Sears Home Warranty
Sears Home Warranty is one of the best home warranty companies for a number of reasons. The Sears Home Warranty plan is an ideal way for busy homeowners to ensure every aspect of their home is taken care of in the event of an incident.
Plans
It offers a chance to purchase a single plan, which then serves to protect a range of systems and appliances within the home, no matter how old they are, the manufacturer, or where they were initially purchased.
There is a choice of three plans, allowing you to select the combination most suitable to your needs and lifestyle, and ensuring that you are not spending money on something you do not need.
Filing Claims
In addition, Sears takes the hassle out of finding a suitable repair service, by supplying one as part of the policy.
If you need to make a claim, simply call the customer service line, which is available 24 hours a day, seven days a week.
This means you can report your claim at a time that suits you, as soon as you need assistance, rather than being required to wait for days or weeks for a representative to become available.
Repair
Once this call has been received, the agent will arrange a suitable time for a pre-screened and qualified technician to visit your home and inspect the issue. Once the problem has been identified, Sears will endeavor to repair the malfunction or replace the item where this is not possible.
A service fee will be required when the technician arrives, and the amount you decide to pay at this point could impact your monthly payments; a higher amount will lower them while paying less could increase them.
What Plans Are Available?
Appliance Plan
As the name suggests, the purpose of the appliance plan is to provide cover for essential appliances within your home. It covers items including:
Built-in dishwasher
Washer and dryer
Refrigerator with icemaker
Range, cooktop, stove or oven
Built-in microwave
Trash compactor
Exhaust fan
Systems Plan
The systems plan is the area responsible for covering all the major systems which are present in your home. Key areas include:
Central heating
Water heater
Water softener
Plumbing and plumbing stoppages
Garbage disposal
Toilets and taps
Garage door opener
Ceiling fans
Electrical systems
All the above components come as standard, but policyholders also have the option to purchase add-ons according to their needs. These extras can cover areas such as:
Sump pump
Well pump
Stand-alone freezer
Septic tank and pumping (here, there is a pumping limit of $500 and a tank replacement limit of $1,000)
Pool and/or Spa with a heater (here there is a heater limit of $1,000)
Whole House Plan
A third option is the entire house plan. As the name suggests, this allows the whole home to be protected and covers 21 major appliances and systems for the ultimate peace of mind. Areas covered include:
Garage door opener
Central heating
Plumbing and plumbing stoppages
Water heater
Water softener
Garbage disposal
Faucets
Toilets
Ceiling fans
Electrical systems
Washer
Dryer
Built-in dishwasher
Oven, cooktop or range
Refrigerator – including ice maker
Range exhaust fan
Built-in trash compactor
Built-in microwave
There are also optional extras which can be added on according to your own needs and requirements:
Septic tank with pumping (limit of $500 for pumping, and $1,000 for tank replacement
Stand-alone freezer
Sump pump
Well pump
Pool and spa heater (this has a heater limit of $1,000)
Sears offers a diverse range of plans, allowing homeowners to make the best choice to suit their household.
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Do You Need a Sears Home Warranty Plan?
The decision to take out a plan is a personal one, but it is worth weighing the pros and cons to ensure that your choice is confident and fully informed.
Pros
Comprehensive coverage: You will have a single plan to cover your whole home, so in the event of an incident, there is just one number to call.
Streamlined repairs: There is no need to try and find a repair service at short notice. The technician will be included with your plan, saving time and effort.
Affordability: The monthly repayments are very likely to be cheaper than having to find a replacement or repair for an appliance or system.
Budget-conscious: You will know exactly what you are paying and when, as well as being able to budget for any premiums, as you have all the figures in advance.
Cons
Required services: You are restricted to only using the repair services and technicians provided by your plan. This can be a disadvantage if you have a preferred and trusted option.
Requirements: All goods which are covered must be in full working order at the time the policy is taken out, which means it is no good for quick fixes.
Limited coverage: There are often caps on the amount which can be claimed, and this may leave you out of pocket if you have a particularly expensive system or appliance.
Exclusions: Make sure you know exactly what is covered. Exclusions and exceptions apply to every policy, and it is essential to be adequately informed.
In Conclusion
The Sears home warranty plan offers three diverse options, which can be adapted and changed according to your needs.
Unlike some of its competitors, there is no build your own plan, which is a little disappointing. However, various add-ons can be added to help make the plan more flexible.
A home warranty plan helps to give you more peace of mind and security and protects you from substantial, unexpected financial costs.
It can prove an affordable way to protect your home and property, and be better prepared for any future emergencies!
Dependable Home Warranty was founded in California in 1974. When they became a subsidiary of Old Republic International in 1982, they continued to provide reliable coverage to all of their customers.
They have since earned a spot among the top three home warranty companies in the country with an A+ rating from the Better Business Bureau.
Old Republic offers efficient and friendly service with comprehensive plans and straightforward pricing.
Their goal is to be a long-time service provider for your household by building a relationship with your family and earning your trust.
Old Republic Home Protection Review: Main Features
Table of Contents
Old Republic offers many ways to protect your investment by covering common home repairs to help keep your house safe and sound.
With Old Republic, you can expect to find a variety of plans tailored to meet your coverage needs. Across plans, there are a number of features that stand out.
The following are some of our favorite Old Republic coverage features included in all plans, features which put it on our list of top home warranty companies.
Heating System
Heating units not exceeding five tons are covered under all of Old Republic’s warranty plans, and they don’t limit the number of units you can cover.
Most companies only allow coverage for one unit, and you have to pay extra for additional units, so this is a really excellent coverage option.
If you have multiple heating units in a large house or you have an outbuilding you use for your hobbies and projects, this coverage provides you with a great solution. Heating system coverage includes parts like the heat pump, ducts, thermostat, floor heater, and drain pumps.
Plumbing System
When a part of your plumbing isn’t working, it can disrupt your entire routine from dishes to showers to bathroom breaks.
Old Republic’s plumbing system coverage includes the following:
Drain line stoppages
Toilet tanks
Pipe leaks
clogs/leaks: in your water heater, water dispenser, garbage disposal, sump pump, and water pressure regulator parts
Electrical System
You use your electrical system for almost every part of your day. Making toast for breakfast, watching TV in the afternoon, and playing games with your kids in the evening all require electricity.
To keep the lights on, Old Republic covers your outlets, switches, panels, breakers, wiring, fuses, fans, and more.
If something goes wrong with your electrical system, they’ll restore power quickly so you can keep moving.
Home Appliances
Old Republic covers home appliances like your oven, cooktop, range, dishwasher, exhaust fan, built-in microwave, and trash compactor.
Every component of these systems is included in the event you experience normal wear and tear or an unexpected outage.
With this coverage, you can keep your kitchen in proper working order to cook meals, do dishes, or gather with family and friends.
Old Republic Warranty Plans
Old Republic offers customizable warranty plans based on location. While there’s not a standard set of plans for you to preview, Old Republic has brochures available that detail the specific coverage in your area.
Old Republic offers location-based plans to provide better coverage based on common problems in your region.
For instance, you won’t pay for air conditioning coverage when your home doesn’t have an air conditioner.
They can provide superior options and more valuable service by segmenting their warranty plans this way. Experts servicing your location will be more knowledgeable about the problems you encounter and be able to fix them more quickly.
The Good – Old Republic Home Protection
Old Republic offers some benefits in addition to their exceptional features, giving you not only great coverage but fantastic conveniences that make your life easier. Here are just a few of our favorites.
Easy Quotes
You don’t have to call Old Republic to request a quote, and you won’t be hassled by their representatives.
They provide online brochures listing the coverage options in your area so you can do the research on your own and find what’s right for you.
The quoted estimate is highly accurate and lists the service call fee along with the warranty plan price.
Online Claims
Most of your home warranty claims can be handled online, adding convenience to the process. If you find faulty wiring in the basement and you can live without spending time in that space for a few days, the online option is easy to use and eliminates the need for you to pick up the phone.
You should always call instead of filing a claim online in the event of an emergency or if you need to make multiple requests like bringing up previous services or getting the status of an existing claim.
Great Reputation
Old Republic prides themselves on having an outstanding reputation, and they do everything they can to maintain it. They’re reliable, professional, and competent.
The company lists their values online so you can always see how important it is to them to provide you with the best possible service.
They value honesty, and they are always open with their customers. With this kind of transparency, you can rest assured they’ll do whatever they can to give you the best service at the best prices.
Online Resources
Old Republic’s website includes a number of educational tools that can help you make an informed home warranty purchase.
With a blog full of home improvement tips, real estate marketing tools, information about home warranties, and more, you’ll be able to find what you need quickly.
The FAQ page includes answers to the questions that customers ask Old Republic most frequently, so when you’re on the hunt for more information about the company or their plans, it’s all right there.
Real Estate Professional Options
For real estate professionals who prefer to add perks to their sales, Old Republic has packages just for you.
You can cover all of the homes you sell with a fantastic starter warranty, enticing your buyers and giving you an edge.
These plans include extensive tools like customizable e-cards and newsletters, open house kits, and other marketing items.
The Bad – Old Republic Home Protection
As with anything you buy, Old Republic has some downsides, none of which are too significant.
Coverage Areas
They don’t provide nationwide service, so their warranty plans aren’t available everywhere.
However, Old Republic has chosen to focus on areas where they feel they can offer the best value, so in the areas where service is available, it’s the best service you can get.
Customer Support
Old Republic doesn’t offer email or online support. Sometimes the most convenient thing you can do is hop online and chat with someone if you have a quick question.
Support Options Limited
The lack of online support forces you to call in a situation where it would typically be simpler to chat.
However, they do have phone representatives, and their online help section is more comprehensive than many other providers. They have an extensive FAQ section as well as a blog that provides even more advice and answers.
Pros
Cons
Comprehensive Coverage
Old Republic Home Protection offers a wide range of coverage options, including for major appliances, systems, and optional add-ons such as pool and spa coverage.
Ease of Use
Old Republic Home Protection makes it easy to request service and track claims online or through their mobile app. They also have a network of pre-screened contractors to provide service.
Strong Reputation
Old Republic Home Protection has been in business for over 45 years and has a strong reputation for customer service and claims handling.
Customizable Plans
Old Republic Home Protection offers a variety of plans and optional add-ons, allowing customers to tailor their coverage to their specific needs and budget.
Alternatives to Old Republic
Old Republic is one of several great home warranty companies. Take a look at the top alternatives below to decide which provider is best for you.
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The Bottom Line – Old Republic Home Insurance Review
While Old Republic doesn’t have online chat support or coverage in all areas, they do have a fabulous reputation for being honest and upfront with customers.
Their integrity standards are some of the best in the business, giving you peace of mind that your warranty coverage will be honored.
Their quotes are easy to find without having to reach out to a representative, they have a no-pressure sales process, and they offer location-specific coverage for more comprehensive plans and solutions.
When it comes to home warranty coverage, Old Republic provides excellent options for all of your home warranty needs.
FAQs – Old Republic Home Insurance
What does Old Republic Home Protection cover?
Old Republic Home Protection offers a range of coverage options, including for major appliances, heating and cooling systems, plumbing, and electrical systems. Optional add-ons, such as pool and spa coverage, are also available.
How does Old Republic Home Protection work?
If a covered item in your home breaks down, you can file a claim with Old Republic Home Protection either online or over the phone. Old Republic will then send a pre-screened contractor to your home to assess the problem and perform any necessary repairs.
How long does a contract with Old Republic Home Protection last?
Old Republic Home Protection requires a one-year contract. The contract automatically renews each year unless canceled.
Product Description: Old Republic Home Protection is a home warranty company that offers coverage for home systems and appliances.
Summary of Old Republic Home Protection
Old Republic Home Protection is a home warranty service that offers coverage for major repairs and replacements for important home systems and appliances. It provides coverage for items such as heating and cooling systems, plumbing, electrical, water heaters, and more. The company also offers additional services such as repair scheduling, 24/7 emergency service, online account management, and an annual maintenance plan.
Cost and Fees
Customer Service
User Experience
Product Offerings
Overall
3.9
Pros
Predictable Coverage: A one-year contract with automatic renewal means that homeowners can count on having coverage for a set period of time without having to worry about renewing the contract themselves.
Continuous Coverage: Automatic renewal ensures that there is no gap in coverage, which is especially important for homeowners who rely on their home systems and appliances.
Budgeting: With a one-year contract, homeowners can budget for the cost of the home warranty and plan accordingly for the renewal.
Cons
Long-Term Commitment: A one-year contract means that homeowners are locked into the service for a set period of time, even if they are dissatisfied with the coverage or service provided.
Cancellation Restrictions: Cancelling the contract before the end of the term may result in penalties or fees, depending on the terms of the contract.
Automatic Renewal: Automatic renewal means that the contract will renew automatically unless cancelled, which may catch some homeowners off-guard if they forget to cancel before the renewal date.
Home warranty services like Advanced Home Warranty offer to shield you from unexpected repair bills in exchange for $400 to $600 a year plus service fees.
You could sign up within minutes online and have coverage in place after a 30-day waiting period.
But do you really need to?
Would the warranty protect you from out-of-control expenses or would it be just another bill to worry about?
Could you find another way to pay for repairs?
To answer these questions with any certainty, you’d need to know the future, and we can’t help with that. You’ll have to settle for the next best thing: Studying the warranty to find out how it works and how it might (or might not) help you.
About Advanced Home Warranty
Advanced Home Warranty hasn’t been around very long, but its sister company, Choice Home Warranty, has provided warranties for decades. The companies offer very similar warranty plans.
Both companies offer lower-priced options compared to other warranty companies. You can save on premiums and service call fees.
You can also save by opting only for coverage on the systems you need, within certain parameters.
Advanced Home Warranty does not let you build your own customized warranty, but its plan structure lends itself to some customization.
Advanced Home Warranty’s Basic Plan
Advanced’s Basic option will cover the fundamental systems in your home with a couple of notable exceptions. The plan covers:
Cooktop
Ceiling and exhaust fans
Dishwasher
Ductwork
Oven / range / stove
Heating system
Electrical system
Plumbing system
Plumbing stoppages
Water heater
Whirlpool bathtub
Built-in microwave
Garbage disposal
Garage door opener
The Basic plan is a bargain at about $400 a year. But it does not cover your refrigerator, your clothes washer and dryer, or your air conditioner.
If you don’t need coverage for these systems, you could save with Advanced’s Basic Plan. If you do need this coverage, you’ll need the Total Plan.
Advanced Home Warranty’s Total Plan
The Total Plan includes everything in the Basic plan, along with your:
Air conditioner
Refrigerator
Clothes washer/dryer
The Total Plan starts around $550 a year.
Optional Coverage: Add Flexibility
With either the Basic or Total Plan, you could add coverage as needed in any combination to protect your:
Each of these add-ons could cost between $20 and $50 extra a year. This flexibility allows you to include only the coverage you need without paying to protect a system you don’t even have.
When warranties bundle more coverage together, you’re more likely to pay for services you don’t need, like a central vacuum system when all you have is an old upright Hoover, or a sump pump when your home is built on a concrete slab.
How Advanced Home Warranty Works
Advanced Home Warranty gets high marks for giving you more control over how you build your warranty coverage.
But we’re still in the hypothetical phase of the shopping process. How would this translate if you bought a plan that meets your specific needs?
Filing a Warranty Claim
You can buy a warranty on your home right now without needing a home inspection or any documentation. Unless your home exceeds 5,000 square feet, you’ll get a standard pricing plan based on your ZIP code.
Like most warranties, you’d have to wait 30 days after signing the contract before you can file a claim with Advanced Home. After your 30-day waiting period, you could call the company’s toll-free service number 24 hours a day.
Paying Your Service Fee
Assuming your warranty covers your faulty system, the company will send out a technician within two days (four days on weekends or holidays).
The technician will charge you $60 to diagnose the problem. Service fee amounts vary between warranty companies, but charging this fee is standard practice. It works like a deductible on your homeowners insurance policy or a co-pay on your health insurance.
The technician will either:
Fix the problem for no additional charge: This is the best case scenario, and if this happens you’ll feel good about your decision to buy the warranty.
Have a more specialized contractor come out: You’re still getting the problem fixed, but it’ll take a little longer.
Recommend replacing the system: As long as a replacement falls within your warranty’s annual spending caps, which we’ll get into below, you can get the system replaced at no charge.
Inform you the warranty won’t fix your problem: This can be infuriating after you’ve already paid the premiums and the service fee. Prevent this scenario by reading the contract carefully before signing.
Your Contract’s Exclusions
Any home warranty comes with some exclusions which could deny coverage even to a covered system in your home.
Many new homeowners who buy a warranty feel surprised when the warranty denies their claims. Advanced Home Warranty’s sample contract spells out the exclusions, which are far too numerous to list here.
Exclusions include:
For a refrigerator: Advanced won’t fix racks, shelves, lighting problems, ice makers, Freon, ice crushers, beverage dispensers, door hinges and gaskets, glass, Internet-connected features, spoiled food.
For a clothes washer: The warranty won’t fix problems with door seals, filter screens, leveling and balancing, glass, soap dispensers, knobs and dials, hinges, damage to clothing.
For an air conditioner: The warranty won’t cover condenser casings, electronic air cleaners, filters, humidifiers, gas air conditioning systems, registers and grills, non-ducted wall units, window units, water towers, improperly sized units, chillers, roof mounts, jacks, stands or supports, commercial grade equipment — this list goes on and on.
Electrical system: The warranty won’t help with alarm systems, attic or exhaust fans, DC wiring, doorbells, fixtures, CO2 alarms, smoke detectors, inadequate wiring capacity, solar power panels or components, running new wires, damage due to power failure or surge. Again, this isn’t all.
The list of exclusions goes on for page after page, but the sampling above should show you the importance of checking the contract thoroughly before signing.
Annual Spending Caps
Your warranty’s contract should also tell you the maximum amount your warranty would pay each year. If your repair exceeds the spending cap, you’ll have to make up the difference out of pocket.
Most warranties have a comprehensive cap and/or a per-system cap.
Here’s a sampling of Advanced Home Warranty’s spending caps:
Heating system: $1,500 per year.
Electrical system: $500 per year.
Plumbing system: $500 per year.
Ductwork: $500 per year.
Other Reasons for Non-Payment
Advanced Home Warranty will provide details in your contract about several other conditions which could prevent the company from paying to fix your system.
For example, the warranty won’t pay for damage resulting from:
Known or unknown pre-existing conditions
Rust or corrosion
Mildew or mold
Sedentary build-up
Also, expect to cover the cost out of pocket for cutting through concrete or walls to access damaged systems. The company also won’t pay to repair cosmetic damage resulting from this kind of repair.
Alternatives to Advanced Home Warranty
Take a look at some of Advanced Home Warranty’s top competitors to ensure you get one of the best home warranties to protect your home.
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Should You Get a Home Warranty?
At this point, many shoppers ask themselves, “Why even bother with a warranty? Why would anyone pay into a plan with so many exclusions?”
These are good questions. Yet thousands of homeowners buy warranty coverage every year because they like the idea of paying about $500 a year in exchange for a few thousand dollars worth of home repairs.
The key is knowing how to use a warranty: The warranty should repair or replace home systems that wear out from normal wear and tear.
A warranty won’t fix a system which faltered because of misuse, over-use, lack of regular maintenance, or improper installation. A warranty also won’t help with cosmetic issues or personal preferences. It won’t pay for maintenance, inspections, or to get your system up to code.
Warranties vs. Homeowners Insurance
Sometimes your homeowners insurance policy could help you repair system damage that a home warranty will exclude. If lightning strikes your home and fries the electrical panel, for instance, your warranty won’t pay but your homeowners policy should.
It’s easy to confuse these two sources of help. Basically, a warranty can help when a system in your home wears out from normal use. Your insurance should help when an outside force — wind, hail, lightning, a tree, a burglar, or fire — damages or destroys your property.
Understanding this difference can help place a home warranty in context.
Who Needs a Home Warranty?
Whether a home warranty makes sense for you depends partly on your home. In a home where systems will be less likely to wear out, a warranty makes less sense.
In a brand-new construction, for example, you’re less likely to need work on your electrical system or your plumbing system. Something could go wrong, of course, but statistically speaking, you’re less likely to face high repair bills than someone in a 35-year-old home.
However, if you bring your older refrigerator and clothes washer into your new home, those systems will be more likely to need repairs this year. Your warranty should reflect this reality.
Reasons Not To Get a Home Warranty
Along with the condition of your home, your overall financial situation can also help you decide whether to buy into a plan like the one Advanced Home Warranty provides.
If you have several vulnerable systems in your home and you have no idea where you’d come up with a couple thousand dollars if needed, a home warranty could be useful. I’m assuming, of course, the $400 to $600 in premiums wouldn’t be too much of a hardship.
If you have money saved or you have another plan for coming up with repair money, such as a low-interest line of credit, you could rely less on the protection of a warranty.
Also, if you know how to fix just about anything in your home, you’d probably be OK without a warranty. You’ll still need to save some money for parts, perhaps, but you’d have less need for a technician to come out and assess your ailing system.
Bottom Line: Follow the Rules
Home warranty companies like Advanced Home Warranty provide a concrete service: home system repairs.
But they tend to sell customers on an abstract concept: a sense of security.
This sales pitch taps into your sense of fear as you enter homeownership. The pitch gives you an action to take (buying a warranty) to ease your fears of out-of-control repair bills.
To make the best decision as a consumer, you have to look beyond this sales pitch to see exactly how the warranty would (and when it wouldn’t) help you. These four rules can help:
Understand What You’re Buying: We call these plans “home warranties,” but they hardly resemble a manufacturer’s warranty which will replace your phone or food processor. Instead, you’re buying a service contract which doesn’t come with very many guarantees. It can offer convenience and it should help replace or repair worn out systems.
Read The Contract: Read and understand every word of your actual contract before you sign it. A sample contract like the one Advanced Home Warranty provides on its site will give you a good idea how the company works. But it’s not the same as the contract you’ll need to sign. If you don’t understand a clause, call customer service. If the rep can’t help you understand, consider moving on to another company.
Customize Your Coverage: Advanced Home Warranty allows for more warranty customization than many companies. Try to avoid paying for coverage you couldn’t possibly use. Sometimes you’ll have to include a system or two you don’t need, but often you can create a customized plan.
Have a Backup Plan: But wait, you might say, the warranty is my backup plan. Since warranties have so many limitations on service, you should still set aside some money for home system repairs. This can also help if your repair exceeds your warranty’s annual spending cap.
No, you can’t see the future and know for certain whether a warranty could save you money in the coming year. But learning as much as you can about Advanced Home Warranty in the present should help you avoid a lot of future frustration.
Although inflation may be cooling, interest rates remain high. As a result, you may find yourself opting to rent rather than own, either by choice or by extenuating circumstances. The good news is that renters insurance is significantly cheaper than home insurance at around just $174 per year on average, according to the Insurance Information Institute (Triple-I). This is because renters insurance only provides coverage for the home’s contents along with the renter’s liability, rather than including coverage for the structure of the home. To help you identify which renters insurance company best meets your needs, Bankrate reviewed the largest renters insurance companies by market share based on a variety of key metrics.
Why renters insurance is important
Renters insurance is relatively inexpensive at around $15 per month on average, but its value can significantly outweigh its monthly cost in the event of a claim.
In addition to replacing your personal belongings, renters insurance also offers coverage for incidents that affect your guests. Perhaps a guest slips at your residence, sustaining an injury. In this case, renters insurance could help pay for their medical costs. If the injury results in legal action, renters insurance could also help pay legal fees. Insurers commonly offer coverage for relocation and food if your rental becomes temporarily uninhabitable due to a covered claim.
Add-ons are generally available for your renters insurance policy as well to help provide more robust coverage. For example, if you need extra coverage for your jewelry or other high-value items, you may be able to add additional coverage on top of your standard renters insurance.
Best renters insurance companies
Bankrate has researched more than a hundred companies offering renters insurance policies to narrow down some of the best renters insurance companies of 2023. The following companies have all been selected based on positive customer satisfaction ratings by J.D. Power, a leading third-party source for industry research, and have received “Excellent” or “Superior” credit ratings from AM Best. Having a positive rating from AM Best indicates that an insurance company has historically been able to meet ongoing financial obligations like operating costs and claims. Additionally, the companies below either include additional protections or offer them as add-ons for your renters policy, such as pet insurance and flood coverage.
*Not rated by AM Best, but rated A (Exceptional) by Demotech for financial stability
**Not officially ranked by J.D. Power due to eligibility restrictions
Allstate
Best for: Discount opportunities
Allstate tied with USAA for Best Home Insurance Company Overall in the 2023 Bankrate Awards. Although the Bankrate Awards focus on homeowners insurance rather than renters, many of the same homeowners features also translate to the company’s renters insurance product. For instance, Allstate won partly thanks to its highly-rated mobile app and wide network of brick-and-mortar agencies. Additionally, Allstate offers even more savings opportunities with its multiple policy discount, 55 and retired discount and Easy Pay discount for scheduled monthly payments. However, Allstate received a slightly below-average rank in the 2022 J.D. Power Home Insurance Study for renters insurance customer satisfaction. While the score is not significantly lower than the industry average, customers seeking exceptional customer service may want to carefully weigh how the carrier stacks against other options.
PROS
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Access to other policy types for a multiple policy discount
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Easy-to-use mobile app and online web portal for policy management
CONS
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Slightly lower J.D. Power score than the other companies on this list
Learn more: Allstate Insurance review
Erie
Best for: Regional coverage with robust options
Erie Insurance has a stellar reputation built upon affordable rates and an easy-to-navigate claims service. Erie offers considerable discounts on bundles, additional living expenses if you need to find a temporary place to live and the option for extra coverage for things like identity recovery and your more expensive personal items. Unfortunately, Erie only offers renters insurance in roughly a fifth of the U.S., but could be an excellent choice if you live in one of the areas it services. States covered are Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Wisconsin. Erie also offers coverage in Washington, D.C.
PROS
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Ability to work with a local insurance agent
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If requesting a quote seven days from policy start date, renters insurance could qualify for an additional discount
CONS
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Limited state availability compared to other national carriers
Learn more: Erie Insurance review
Liberty Mutual
Best for: Renters on a budget
Liberty Mutual could be a great choice for renters on a tight budget. The company advertises that its policies start at just $5 per month. Although the coverage options available are fairly basic, you might be able to add replacement cost coverage for your belongings, as well as jewelry coverage or earthquake coverage. However, Liberty Mutual does have a higher-than-average complaint index score with the National Association of Insurance Commissioners (NAIC). A score of 1.00 represents a baseline number of complaints. Liberty Mutual’s overall score is 2.66, indicating that the NAIC receives more than two and a half times as many complaints for the company than average.
PROS
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Option to add replacement cost, meaning personal belongings will be replaced without factoring in depreciation
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With blanket jewelry protection, renters have one set amount to cover their jewelry with no need for appraisal or deductible after a covered loss
CONS
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High NAIC score indicates Liberty Mutual receives more complaints than other similar-sized carriers
Learn more: Liberty Mutual Insurance review
Lemonade
Best for: Digital policy management
Lemonade is another 2023 Bankrate Award winner for Best Digital Home Insurance Company. Lemonade terms itself as “insurance for the 21st century.” Its mobile app, powered by Maya, its artificial intelligence bot, helps renters get a quote, manage their policy and file a claim all in one place. Renters who want an insurance company focused on global causes will appreciate that leftover premium is donated to many different causes like the Malala Fund, the Trevor Project and March for Our Lives. However, the all-digital experience means renters won’t be able to have in-person customer service. Additionally, Lemonade renters insurance is only available in 28 states and Washington, D.C.
PROS
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Simple mobile app interface for all your insurance needs
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Policies can be started in 90 seconds and claims paid out in as little as three minutes
CONS
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Renters insurance is only available in 28 states and Washington, D.C.
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Lemonade car insurance is only available in a few states, making it difficult for renters to qualify for a multiple policy discount
Learn more: Lemonade Insurance review
Nationwide
Best for: Customer service experience
If you’re looking for world-class customer service, then Nationwide might be worth checking out. Out of all the renters insurance companies that J.D. Power officially ranked in 2022, Nationwide earned the top spot. Although Nationwide might be a little more expensive than average (the company states that its renters policies start at $20 a month), the added expense could be worth it to the right shopper. Additionally, Nationwide offers a Brand New Belongings endorsement, which could help you replace your items for their replacement value rather than actual cash value (which takes into consideration depreciation).
PROS
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May get a bundling discount for purchasing renters and auto
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Optional coverage-add on could help make for a robust renters policy
CONS
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May be more expensive than average
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Customer service is not 24/7
Learn more: Nationwide Insurance review
State Farm
Best for: Local offices
State Farm offers renters insurance in every state throughout the U.S., making it a great option for renters in underserved rural areas or areas. But it’s not just State Farm’s wide availability that may make it a good option. The company also has exceptional ratings from companies like J.D. Power and AM Best, which could make it a safe bet for your renters policy. Although State Farm doesn’t offer nearly as many discounts as some of the other providers we’ve chosen, you might lower your premium if you insure your car with State Farm or if you have security devices installed in your apartment.
PROS
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Excellent customer service and financial strength ratings from third-party agencies
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Knowledgeable local agents to help you with your insurance journey
CONS
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Fewer discount opportunities compared to other carriers
Learn more: State Farm Insurance review
The Hartford
Best for: Policyholder perks
To qualify for The Hartford, you must be a member of AARP — and to be a member of AARP, you must be 50 or older. However, AARP members get exclusive access to a long list of discounts and perks as well as access to The Hartford renters insurance. The Hartford policyholders could save on hotels, gas, plane tickets, cell phone plans and more. The carrier’s New for Old protection also comes standard in its renters policies, which offers replacement cost for your items if they are damaged or destroyed in a covered loss. Additionally, The Hartford may give you a discount on your renters policy simply for living in a gated community.
PROS
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Flood coverage is standard on renters insurance policy
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If moving or deployed overseas, personal belongings would be insured with overseas coverage
CONS
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Not available to the general public
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Can only do business over the phone or online, no local offices
Learn more: The Hartford Insurance review
USAA
Best for: Military-centric coverage
USAA tied for Best Home Insurance Company Overall in the 2023 Bankrate Awards, partly due to its high J.D. Power scores and nationwide availability. The company has a stellar reputation among consumers and the insurance industry, and it offers renters insurance policies particularly supportive for those in a military lifestyle. The basic policy includes coverage for personal property, personal liability, medical payments and additional living expenses. Flood coverage is also included in standard USAA renters insurance policies, which is notable considering that flood insurance typically has to be purchased separately.
However, USAA is not available for everyone, which could be considered a major drawback of the company. Only military members, veterans and immediate family members may be eligible for coverage. Unless you fit one of these categories, you will not be able to purchase a USAA policy.
PROS
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May get a bundling discount for purchasing renters and auto
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Optional coverage-add on could help make for a robust renters policy
CONS
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May be more expensive than average
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Customer service is not 24/7
How to compare renters insurance companies
With so many renters insurance companies on the market, how do you choose which provider is right for your needs? Finding the best renters insurance policy will depend largely on your particular living situation and coverage preferences. The first step to finding a provider who can best cover your unique circumstances is to take some time to consider what you may want from a company.
For example, if you run a business or keep business-related items in your home, you may find that an add-on for extended coverage or business personal property is necessary. This may cause you to look for a provider which specializes in renters insurance for business personal property.
Additionally, it may be helpful to review third-party reviews from companies like J.D. Power and AM Best. J.D. Power runs numerous studies each year, including evaluating renters insurance companies. Scores are out of 1,000 points and evaluate customer satisfaction based on a number of factors. AM Best rates the financial strength of insurance companies based on their historical ability to meet financial obligations and pay claims. This measure may be comforting when predicting how future claims are likely to be handled, especially if a company is inundated with numerous claims at once.
Once you have identified a handful of companies that could meet your needs, you can start requesting quotes. This can often be done online or by phone, or you could contact a local agency. Getting quotes from several different insurance carriers allows you to compare premiums, coverage options, discounts and policy features.
Additional considerations before choosing a renters insurance policy
Like any insurance policy, renters insurance is not one-size-fits-all. No two rental circumstances are the same, and neither will the insurance for them be. When choosing a renters insurance company and personalizing your policy, you may want to consider:
The value of your belongings. To help ensure you do not over- or under-insure your belongings, you could create a home inventory. This exercise could help you estimate the total value of your belongings so that you choose an appropriate personal property coverage amount.
If you have any high-value items. Possessions like fine jewelry, collectibles, fine art, guns or antiques often have set coverage limits included within a policy. For example, without alterations to a policy, you might only have $1,000 in coverage for jewelry, regardless of how much personal property you buy. Scheduling your high-value possessions can provide more accurate and broader coverage.
If you have a pet. You might not consider your pet when you buy renters insurance, but you should. While many pets are covered for liability, some dog breeds and exotic animals are often excluded. If you have one of these animals, you probably want to look for a company that will extend liability insurance to it. That way, if your pet injures someone, your insurance can step in to help pay for the bills.
How often friends and family visit. If you like to host events at your home, or often host large parties of people, having this in mind could help you determine the right amount of liability insurance for your needs.
What company insures your vehicle: Many car insurance companies also offer renters insurance. When you bundle your policies together, you could see significant savings. Plus, there’s the added convenience of having all your insurance policies in one place.
If you aren’t sure where to start in your search for renters insurance, sitting down with a licensed insurance agent can be helpful. An agent can listen to your needs, circumstances and concerns and help recommend companies, coverage types and policy features that fit your situation.
If you’re thinking about buying a home warranty, you may be considering First American Home Warranty, a leader in the industry.
Home warranties like First American’s can feel like a gamble. Will the warranty pay when you need it to? Or will you find out the hard way your warranty doesn’t cover the repair you need?
You may not know unless you comb through a warranty contract line by line looking for exceptions, conditions, and requirements of you, the homeowner. So let’s take a close look at First American Home Warranty.
About First American Home Warranty
First American Home Warranty has been in business for more than 35 years and currently serves about 450,000 clients in 38 states.
That’s a substantial amount of customers and a wide range of coverage. Paired with more than three decades of service, the numbers speak highly for First American’s reputation. It’s one of the leading home warranty companies today.
But you also need to assess the terms of their home warranty policies and the types of claims they actually cover to make an informed decision.
Let’s go through the company’s warranties element by element:
What Does First American Home Warranty Cover?
First American has two plan categories: Basic and Premier. Any prices quoted in this section could change without notice.
First American typically raises its premiums every few years. The company sells annual contracts but allows monthly payments.
Basic Plan
The Basic Plan ($28 a month) covers:
Refrigerator
Dishwasher
Range/oven or cooktop
Microwave
Garbage Disposer
Trash compactor
Washer and dryer
Premier Plan
The Premier Plan ($44.50 a month) covers everything in the Basic Plan, plus:
Electrical system
Plumbing system
Water heater
Central heating
Garage door opener
Ductwork
Central vacuum system
Upgrades
Additional available upgrades to either plan include:
Air conditioning service ($9 extra per month)
Coverage for additional refrigerators ($4 extra per month)
Pool and pool equipment ($15 extra per month)
Well and well pump ($9 extra per month)
How Much Will First American Home Warranty Pay?
To understand how much a warranty could pay, you have to consider payout caps and service fees.
When you contact your warranty company for service, the company will typically send out a technician to assess the situation. You’ll pay a service fee for this initial step, and you can think of the fee as a deductible.
With First American Home Warranty, the fee is $75 in most states, but it could be as high as $100. We looked at a contract from Texas, where customers currently would pay $75 per visit from a technician.
Assuming the repair or replacement you need will be covered by the warranty, your next concern will be the warranty’s payout cap. Again, these can vary from state to state.
Expense Caps
The contract for Texas is fairly typical for First American, and it caps payouts like this:
Plumbing: $500 maximum per year for repairs to the pipes in your home.
Water heater: $1,500 maximum per year, excluding flues and vents and fuel storage areas.
Kitchen appliances: Limited to $3,500 per covered appliance.
Heating system: Limited to $1,500 per year.
Central air conditioning (optional add-on): limited to $1,500 per year.
Other systems in the First American Home Warranty contract do not cap expenses, but they have specific limits on what parts of the system the warranty will repair or replace.
Limitations
In these cases, the fine print can go on for a while, so the following lists aren’t all-inclusive. If you’d like to fully assess the details of a contract, you’ll need to go through the quote process and ask for a sample contract.
The following examples should give you a better idea what to look for when you’re investigating a contract’s limitations:
Electrical system: No expense cap, but the plan won’t pay for door bells, alarm systems, intercoms, audio or video recording devices, damages due to power surges or inadequate wiring capacity.
Garage door openers: No expense cap, but the plan won’t pay for remote controllers, gate motors, hinges and springs, side rails.
Laundry appliances: No expense cap, but the plan won’t pay for repairs to filter and lint screens, knobs and dials, venting, or damage to clothing.
These limitations are typical for a home warranty, and you’ll want to study the details carefully before signing up. If you think the contract won’t provide services you anticipate needing, don’t sign the contract.
Filing Warranty Claims
You will have to wait 30 days after signing the First American warranty contract before you’re eligible to file a claim.
After the waiting period, you can contact First American’s customer service staff any time of the day or night, either via phone or online to start a claim.
How to File a Claim
Starting the claims process online has the advantage of documenting your claim from the outset in case you need to dispute the company’s decision later.
If the customer service staff is certain your problem won’t be covered, the claims process can end immediately. But in most cases, the company will send out a home repair technician who will charge you the service fee we discussed earlier. The service charge is typically $75.
After you pay the service fee, the warranty’s technician should fix or arrange a replacement at no charge, up to the annual limits of the warranty. At this point, your warranty will either seem like a great idea or a waste of money, depending on the outcome of your claim.
Often, when a warranty does not pay a claim, the homeowner feels cheated, and understandably so. However, warranty companies like First American generally do not breach their own contracts, so knowing the intricacies of your contract can help you dispute an unpaid claim.
Common Reasons for Claims Denials
Here are some common and legitimate reasons a warranty could deny your claim for service:
System not covered: When you buy a warranty and then renew it a couple of times, it’s easier than you might think to forget what coverage you bought, especially if your real estate agent helped purchase the initial warranty. A Basic Plan from American Home won’t cover your plumbing, for example, so if you filed a claim to fix a frozen pipe, you’d get an automatic denial. I know this is kind of like asking whether your computer’s plugged in when you call tech support. But there’s a reason people ask.
Bill not paid: Sometimes customers fall behind on their monthly bills and decide to skip a few warranty payments. If that happens and you need to file a claim, you’re giving the warranty company a reason to deny service.
Contract caps met: American Home has more relaxed payout maximums than most other companies, but on many systems, the company still sets an annual maximum. This makes sense: A company wouldn’t stay in business if it regularly paid out more than you’re paying in premiums.
Maintenance standards not met: Again, American Home’s standards aren’t as high as many other companies, some of which require proof you’ve performed regular maintenance on your covered systems in order to get coverage. American Home will often require regular maintenance on larger items such as your central heat and air (if you opt into AC coverage). The company typically doesn’t require its own initial home inspection before you sign the contract.
How to Avoid Denied Claims
Getting a claim denial can be infuriating. You feel cheated, and you still have to figure out how to pay for the repair you need. Reading your contract carefully, line by line, will help you know whether the warranty provider is living up to its agreement or whether you should file a claim.
Believe it or not, a denial may not be the worst experience you can have with a warranty company. You could get approved for service only to experience delays in service making you feel stuck in-between.
Or, you could get stuck in another in-between: a repair you’re not happy with that the warranty company insists has been completed.
Who Will First American Send to Help?
First American has its own staff of home repair technicians. If the company’s technicians need more expert help, they can bring in specialists of their choosing. Customers have little control over who comes out to repair your home system.
Although First American serves nearly half a million customers around the country, the company usually sends technicians from your general area.
This reduces waiting times, and it also helps the company adhere to your local codes.
However, the company will not send help specifically to get a system up to code. A warranty exists to replace or repair systems in your home, not to maintain them.
Grading First American Home Warranty
If you’re trying to decide whether to buy a warranty from First American Home Warranty, you’ll quickly discover it’s a tough question to answer.
First American Pros
Simple contracts: Compared to many other companies, First American’s contracts can be easier to understand.
Lower premiums: The company is on the lower end of the cost spectrum.
Complaint resolution: The company has the customer service staff in place to help resolve customer complaints.
Reasonable caps: On the surface, none of First American’s annual caps on repairs seem prohibitively low.
First American Cons
Lack of clarity: Though the contracts are easy to understand, they don’t always answer every question you may have. You may need to call for clarification.
Lack of flexibility: Some warranties allow you to customize your coverage to meet your home’s needs. For example, you could pick 10 systems to cover. First American offers only specific coverage plans.
Closed service network: First American sends its own specialists and technicians, meaning you have less control over the repair process.
What Customers Say
In many ways, the First American’s customer service rates better than other warranty companies:
The Better Business Bureau gives the company a B+.
TrustPilot, which compiles customer reviews, give it 4 out of 5 stars.
These ratings result, in part, from First American’s commitment to dealing with complaints. But, individual customer reviews tell a different tale. Customers express frustration, annoyance, and disgust in review after review.
Of course, customer reviews tend to lean toward the negative. Happy customers are generally less compelled to share their feelings online. Still, this preponderance of frustration can’t be simply ignored.
Truth be told, it’s unfair to single out First American. Just about any home warranty company can inspire these feelings when the warranty doesn’t pay as the customer expected.
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Do You Need a Home Warranty?
A warranty works kind of like home insurance, but instead of protecting you against loss of value from disasters such as fires and hurricanes, a warranty can shield you from out-of-control home repair costs.
When to Avoid a Home Warranty
You have a healthy savings account: When you could afford to repair or replace major appliances or home systems if needed, you could have less need for a warranty.
You can borrow money easily: When you have great credit and a low debt-to-income ratio, you can usually find no-interest loan offers for big repairs like HVAC systems or electrical wiring repairs.
You have a brand new home: The protection a warranty can provide makes the most sense with older homes which could require expensive repairs at any point.
You have other protections in place: Maybe most of your home’s systems already have manufacturer’s warranties or service contracts from the installation company.
You’re good at fixing things: Some people have the gift of fixing just about anything that breaks, meaning they’d be on the hook only for parts and their own time.
If any of the above scenarios describes your life, you could possibly get by without buying a warranty.
When to Buy a Home Warranty
On the other hand, if the following conditions describe your home and your financial life, you may want to consider a warranty more seriously:
Several major systems in your home are old: An HVAC system will typically last 20 to 25 years. Smaller systems such as dishwashers, clothes washers and dryers, garage door openers, and stoves may last a decade or so. If you buy an older home with aging systems, a warranty can seem more appealing.
Your mortgage payment stretches your budget: If your house payment already takes 35 percent or more of your monthly income, a huge repair bill could spell financial disaster. A warranty may seem like a sensible precaution.
You don’t have much in savings or solid credit: If you couldn’t spend or borrow your way out of a tight spot, a warranty can provide some extra peace of mind.
Someone with all of these limitations may be the most ideal candidate for a home warranty. But someone with a tight budget also has the most to lose by getting a warranty that doesn’t pay.
Bottom Line
Here’s the number one rule if you’re shopping for a home warranty: Read and understand every last word of the contract before signing up.
If you don’t understand part of the contract, get in touch with the company’s customer service staff to get answers to your questions.
Becoming an expert on your warranty’s contract will help prevent you from being surprised when the warranty won’t cover a repair you need.
Becoming an expert on the contract can also prevent you from buying a plan that doesn’t meet your home’s specific needs.
Home warranties like First American sell peace of mind. It’s up to you to find out whether the warranty would actually provide it.
Every day, we make decisions which help to protect our homes and properties.
We insure our vehicles, take out homeowners insurance, and make sure we sign up for the warranties on our items to ensure they are safe and covered for longer.
A home protection plan allows you to protect the essentials in your home in case of malfunction or breakdown.
TotalProtect can help you out by providing a plan which is designed to cover the expense of replacing or repairing your appliances if they go wrong—a fact which is inevitable over time following the general wear and tear of everyday life.
A home warranty means you are fully prepared for whatever life throws at you, and saves you from spending massive amounts on replacing your appliances.
About Home Warranties
A home warranty acts in a similar way to taking out an insurance policy on your home or vehicle.
Most homeowners have home insurance—a requirement for many mortgages—but this is limited to scenarios such as theft or damage to your property from fire or other disasters.
Any mechanical aspects of your home, from garage doors to dryers, will not be included, meaning you will be left with the headache of sourcing a repair person and facing a hefty bill if anything goes wrong.
What Home Warranties Cover
A home warranty, on the other hand, is designed to cover these appliances, as well as heating and cooling systems, plumbing, electrical, and more.
You pay a monthly sum and are fully covered for any repairs, replacements or breakdowns which occur during the life of the product.
In return for this regular payment, the company will provide technicians who can repair, replace or, in rare circumstances, offer a cash substitute for any items which have malfunctioned.
How Claims Are Processed
In the event of a claim, you can contact the customer services team by phone or email, and this resource is available 24/7, even during national and public holidays.
Upon receiving this call, the handler will be able to schedule a technician to visit your home and assess the situation, as well as carry out any repairs or replacements which are needed.
With over 40,000 pre-screened technicians, this is a fast and easy way to deal with the problem quickly.
What TotalProtect Has to Offer
TotalProtect is among our top picks for home warranties.
A plan from TotalProtect is ideal for busy homeowners who do not want to be calling a technician every time something breaks down.
This takes up precious time and often proves more expensive. Instead, a single call to your provider will take care of everything for you.
One key bonus is the ability to pick and choose your plans—we will discuss these in more detail later—and this allows you to adapt your policy to your lifestyle and needs, ensuring that you are not paying for anything unnecessary.
You can select the items, systems, and appliances which you require cover for, and tailor your plan to suit you.
TotalProtect Plans
TotalProtect offers three plans.
These are:
Appliances Plan
This plan covers all appliances in your home, with a particular emphasis on kitchen and laundry appliances. Items covered include:
Stoves, ranges, and ovens, including wall ovens
Range exhaust hood
Refrigerators
Washers and dryers
Dishwashers
Built-in ice and water dispensers
Built-in microwave
Integrated trash compactor
Built-in dishwasher
Garbage disposal
Systems Plan
As the name suggests, the systems plan is designed to cover all critical systems within your home, such as:
Heating and air conditioning systems
Gas and electrical systems
Interior plumbing
Water heaters
Toilets
Plumbing lines
Plumbing stoppages
Sump pump
Whirlpool bath
Central vacuum
All doorbells and chimes
Garage door opener
Smoke detectors
Interior electrical lines
Interior gas lines
Attic or whole house exhaust fan
Combo Plan
The combo plan allows you to pick and choose the elements of the systems and appliances plans, to create the perfect combination for your needs and requirements.
It also comes with additional benefits, including:
Homeowners insurance discounts
Unknown pre-existing condition coverage
No inspections required before taking out the policy
Coverage for rust and corrosion
No annual aggregate caps
Coverage for your pool or spa
Exclusions
As with any policy, there are certain exceptions and exclusion which cannot be claimed.
Unlike some of their competitors, TotalProtect will cover a pre-existing condition which you were previously unaware of.
That means you will not be abandoned without support if one of your systems or appliances suddenly develops a fault.
There is typically a price cap of around $1,000 per item, which may leave some homeowners out of pocket if you have invested in a particularly pricey product.
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Should You Get a TotalProtect Home Warranty?
Pros
Work guarantee: 180-day guarantee on all work, repairs, and replacements, which usually far exceeds the warranty you may get from sourcing an independent technician or service
Customer service: 27/7 access to customer support, allowing you to make a claim at a time which is most convenient to you and your schedule
Flexible payments: Monthly repayments make this an affordable option, and it can work out as being better value than sourcing your own contractors and replacements, particularly if you are required to replace more than one item.
Easy booking: TotalProtect will provide the technician, saving you time and effort
Versatile plans: A range of plans, including the option to create your own providing flexibility and ensures that you are not paying for anything you don’t want or need
Cons
Limited selection: You are restricted to using the technicians and contractors supplied by TotalProtect. There is no option to choose your own supplier, even if you have a preference
Vague exclusions: TotalProtect is not clear on the exclusions from the policy. It is essential to be fully aware of any exceptions before agreeing to sign up
Low maximum: Price cap of around $1,000 per product for a repair or replacement, which could leave homeowners with more expensive items out of pocket
In Conclusion
A home warranty plan is an ideal way for busy and time-poor homeowners to ensure that every aspect of their home, systems, and appliances are fully covered.
It offers an affordable way to repair and replace any aspects which begin to malfunction and has the bonus of coming with a team of qualified technicians who can diagnose and address the problem in no time.
The option of low monthly repayments is also an appealing alternative to the cost of a new air conditioning system or refrigerator.
As with any policy or warranty, it is crucial to read the small print and be confident that you have all of the facts and information you need to make an informed decision. It is particularly important to consider the exclusions to the policy.
Make sure that this information is available to you at the start of the process to reduce the risk of any unpleasant surprises when you come to make a claim.
If you are looking for a convenient solution to take care of your appliances and home systems, a home protection warranty could be precisely what you need.
Stone walls, crocodile-filled moats, Rottweilers — our ancestors found some pretty creative home security solutions!
Today’s home security systems feature a more tech-savvy approach, but the goal remains the same: to keep your family, your property, and your stuff safe from outsiders.
Recent innovations have fueled a new surge in home security sales.
As you shop around and compare systems, consider your home’s security challenges, your lifestyle, and your budget.
Chances are good you’ll find the system you need, whether you’re a new homeowner or just new to the home security market.
How Security Systems Have Changed Over Time and Recently
Believe it or not, tech-driven security systems have been around nearly two centuries. Augustus Russell Pope of Boston combined electricity, magnets, and a bell to create a burglar alarm in the 1850s.
Marketing the invention proved difficult, though, because people feared electricity as much as they feared intruders. As the decades passed, the world caught up with Pope’s idea.
By the early 20th century, electricity had grown safer and more common. The burglar alarm started to catch on.
By the 1970s, home security systems featured motion sensors. Off-site monitoring caught on in the 1980s.
Prices started to fall in the 1990s, making systems accessible for more homeowners. Now the internet has changed the industry again.
For a few hundred dollars in hardware and installation fees — or perhaps less if you install the system yourself — you can monitor your own home from your smartphone from work, school, your commute, or even while on vacation.
These new systems have drawbacks, too, so before you jump in, make sure you’re getting the security your family needs.
Monitored Vs Unmonitored Security Systems
This has become the first question to ask when shopping for home security: Should you pay more for a system with professional monitoring included?
For decades, monitoring fees prevented a lot of homeowners from getting a home security system.
Even the lowest fees can become cost-prohibitive when you pay them month after month and year after year for the indefinite future.
For those homeowners, unmonitored systems may offer the only way into the home security market. If you have a choice, though, give this question some thought.
Monitored systems come with some advantages you may like.
Advantages of Professionally Monitored Systems
Just like with cars, computers, and houses, you get what you pay for with a home security system.
A monitored system costs more, but consider these advantages:
More seamless responses: With an unmonitored system, it would be up to you to contact fire or law enforcement officials when you get an alert about an intruder. When you’re out of town, calling 911 probably won’t work as quickly since you’d have to be transferred between areas of jurisdiction. Someone monitoring your home should be able to contact officials more quickly.
Someone else deals with false alarms: When you’re at work or out shopping and you get a security alert from your unmonitored security system, it’s up to you to assess the risk. If the FedEx guy triggered the alarm by delivering this month’s dog food, you’d feel relieved. But when something like this happens several times a day, it starts to get distracting. A monitored system can take care of these distractions, saving your attention for when it really matters.
Equipment may be included: Customers who buy an unmonitored system tend to be responsible for maintaining and upgrading their own security equipment. A monitored system would more likely include the equipment and, naturally, its maintenance and upgrades. In a fast-changing industry, your gear can get outdated pretty quickly.
Protection isn’t dependent on cell service: Most of us always know where our phones are. But what happens when you’re in an area with poor service or when you lose your phone on the Slinky Dog ride at Disney’s Hollywood Studios? (I’m not judging!) You may not have access to your at-home security system alerts when most needed. A monitored service can contact authorities to protect your home even when you aren’t in the loop.
Advantages of Unmonitored Systems
Unmonitored, also known as self-monitored, home security systems have become the fastest growing segment of the market for a reason. Advantages include:
The cost, of course: Since you could use a self-monitored home security system without paying monthly fees, you can save a lot month to month and year to year. Even if you pay a professional to install the system’s panel or cameras, you can still avoid that monthly bill.
A perfect fit if you’re renting: The home security market has traditionally ignored renters since they don’t have the authority to install hardware or enter a long-term contract. An unmonitored system offers exactly what a renter needs: flexible service with no long-term commitment.
Having more control: When you’re making all the decisions about whether to call for help or whether it’s a false alarm, you’re automatically controlling the response level. Since you know better than anyone what’s normal at your home, this can prevent some confusion. For example, the monitoring service may not know your brother has a spare key but does not know the alarm code. Since you know this, you can automatically filter out the police response as a viable option (unless you really have it in for your brother).
Integrating additional home systems: Some of the best self-monitored systems are an extension of WiFi-enabled home automation. Along with feeling more secure, you can also lock or unlock doors, change your thermostat, turn certain lights on or off, and even control the garden sprinklers (and lawn mowers!), all from an app. (Traditional monitored services have started adding these features, too.)
Can You Get the Best of Both Worlds?
Wouldn’t it be nice if you could combine the best aspects of professionally monitored and self-monitored systems?
Well, the industry has been moving in that direction.
Here’s why: The rapid growth of self-monitored home security systems has grabbed the attention of the traditional home security companies.
The leading monitored services are compensating by adding modern conveniences such as app-based customer control and, in some cases, acquiring smaller, self-monitored home security companies.
And it’s not a one-way street: Some self-monitored services have added the option to have your home professionally monitored, but with a twist. You can get add-on monitoring for a fee only when you need it. That way you could still avoid the contracts and flat monthly fees.
As the market continues to evolve, I’d expect to see less separation between these two categories.
But full-time monitoring will continue to be a separator. It simply costs more money to have someone monitoring your home and responding to problems all day every day.
And in many cases, professional monitoring equals a more secure home.
Should You Buy a Monitored or Unmonitored Security System?
This gradual merging of monitored and unmonitored home security features could, ironically, make it harder to decide what kind of service to buy.
If you like the control an unmonitored system offers, you don’t necessarily have to opt for an unmonitored system anymore. You can find a monitored system with similar capabilities.
Or, if you want a monitored system because you’re out of town a lot, you no longer have to choose from only traditional security service providers. You may be able to find an unmonitored service with added-on monitoring periods without a contract.
If you can’t decide for sure, take a look at your home, your lifestyle, and your personal preferences. They can tell you a lot about your needs.
What Type of Home Do You Have?
The kind of home you’re protecting should help drive the kind of protection you buy.
Makes sense, right?
Well, it’s easy to forget such obvious things once you start comparing features, prices, contracts, apps, and customer reviews.
Take a look around your home. If you have two full floors full of windows and doors, along with a garage door and windows to consider, you’ll need a lot of equipment installed and maintained.
You’ll also have a lot more sensors to trigger false alarms. A monitored system could be worth the cost.
On the flip side, if you live in a 2-room apartment with just a few windows and only two doors, your up-front equipment investment will be less, and you’ll have fewer trigger points to keep an eye on as you monitor things while away. A self-monitored system could do the job.
How Connected Are You?
If a home security system sends an alert to your smartphone but no one is around to hear it, does it make a sound? We could debate that question for hours, and if your phone happens to be off, someone could be stealing your stuff as we contemplate.
With an unmonitored system, you’re on call around the clock via your smartphone. If you’re the kind of person who likes to unplug after work or while on vacation, you may want to lean toward a monitored security system.
If, however, you and your phone are inseparable — if you sleep with the phone beside you on the pillow — you’re likely set up well to monitor security alerts.
That said, I’d suggest using a different ringtone for home security alerts. You wouldn’t want to ignore a serious problem thinking it was just a reminder to pick up your sister’s cat from the vet tomorrow.
How Connected Is Your Home?
Most of us have WiFi at home now. Most does not mean all, though.
People without WiFi at home will have a hard time using all the features of a self-monitored home security system.
In that case, a landline-based, traditional system would be a better option.
If you have WiFi, the quality of your surveillance will depend a lot on the quality of your Internet connection.
As more devices and appliances get online — thermostats, washing machines, tablets, phones, TVs, refrigerators, lawn mowers — there’s more demand on your network. For many of us, a DSL connection just doesn’t cut it anymore.
If you have a gigabit-per-second coming across fiber into your home, your unmonitored security features should work just fine.
How Busy Are You?
A lot of us can add tasks to our regular schedules without a lot of stress. People in the gig economy or with a couple side hustles may have just the kind of schedule flexibility they need to assess threats from their smartphones.
Sure, you may have to re-arrange a few things or tell a client to hold on a second while you check the alert on your phone, but it’s still possible. People who teach school, run meetings, perform surgery, or preside over class-action lawsuits may not have time to check their phones every couple of hours.
Just like any other commitment you take on, consider the time demands of an unmonitored security system.
I’ve been in more than one meeting where someone had to check on a security alert. (Usually, something like leaves blowing onto the porch or a delivery from Amazon triggered the alert.)
Do You Own Your Home?
I referred to this earlier, but it bears repeating. Traditional home security firms more or less ignored renters for years since they didn’t have permission to install a system anyway.
With no wires to run behind walls, a tenant can usually install an unmonitored system without changing the property.
Mounting a camera in the corner is hardly different from hanging a picture, and it’s a whole lot simpler than installing a wall-mounted TV.
Plus, when you move on to a new home in a new city, you could take a lot of the system’s components with you to use at the new rental house. Of course, check your lease agreement to make sure you have permission to make the changes an unmonitored system would require.
And, by the way, if you’re a renter who would like a traditional monitored system, ask your landlord about it. He or she may be fine with the idea, especially since a system could reduce your landlord’s homeowners insurance rates.
Best Security System Providers For 2023
We’ve chewed on a lot of theoretical stuff, so let’s get into what really matters. How do systems compare to each other, and which one should you get?
A year or so ago I would have made two best security system lists: One for monitored security systems and one for self-monitored systems.
The features of these systems have blended so much I think one list will better serve shoppers. I’ll be sure to indicate whether you would need a contract to use each service.
While convenient features are important and worth weighing into the equation, the quality of the system itself still matters most.
So I’ll be giving the quality of your home security system first priority in these comparisons while giving conveniences and customer flexibility a little less importance.
Frontpoint
Contract required: Yes Professional monitoring: Yes Length of contract: At least one year
Remember earlier when I suggested the future of home security will likely blend the features of monitored and unmonitored systems?
I had Frontpoint in mind when I said that.
This company has led this confluence of features, offering professional monitoring plus the conveniences do-it-yourself systems introduced.
Yes, Frontpoint requires a contract and you’ll be paying for 24/7 professional monitoring. But you’ll also have a user-friendly app that can control your locks, lights, and thermostat.
With Frontpoint, you install the equipment yourself since it’s wireless, lightweight, and easy to position with included adhesive strips.
Essentially, Frontpoint offers the best features of monitored and unmonitored services in one package: professional monitoring, quality equipment, convenient features, and a do-it-yourself approach.
That’s why I’ve listed Frontpoint first.
I also like the 30-day, risk-free guarantee. If you’re unhappy with the service, Frontpoint won’t bill you and you can return all the hardware. You won’t be on the hook for the rest of the contract.
I also like the one-year contract. Most companies require a three-year commitment.
Frontpoint offers three price points. If you’d like to access recorded video surveillance from your property, you’ll need to go with the most expensive plan.
Best for: A homeowner who wants mobile control, full-time professional monitoring, and more contract flexibility than usual. Avoid if: You don’t want to enter at least a one-year contract.
ADT Pulse
Contract required: Yes Professional monitoring: Yes Length of contract: At least three years
ADT, a leader in home security for almost 150 years, has also started offering the conveniences of unmonitored security in its ADT Pulse system.
Like Frontpoint, ADT Pulse still bases its services on contracts, but it has bulked up its app to give customers more control over their security equipment. In fact, you can probably incorporate your own cameras and sensors into ADT’s system since it supports many third-party hardware brands.
Unlike Frontpoint, ADT Pulse includes professional installation (and a corresponding $99 set-up fee). The result is another best-of-both-worlds approach for the customer who is willing to enter into a contract.
In ADT’s case, the contract will last at least three years, and you’d be billed a hefty termination fee to get out of it.
ADT will let you out of the contract if you’re not happy with the service, but it’s not a no-questions-asked policy. ADT will try to resolve your issues, which is a good thing if home security is your priority.
Best for: A homeowner who wants a time-tested, trustworthy home security partner with professional installation plus modern mobile-based control. Avoid if: You’re not sure about entering a long-term contract.
ProtectAmerica
Contract required: Yes Professional monitoring: Yes Length of contract: At least three years
By now you’re sensing a trend: Traditional, contract-based home security companies that have adopted modern conveniences are dominating the top of this list.
And for good reason: Ultimately, a home security system should provide the best home security for you and your family, and professional monitoring tends to offer more security.
ProtectAmerica makes this list for those reasons and because of its flexible pricing options. The company has five price points.
I’d stay away from the company’s less expensive, landline-based options. They do not offer the control and integration you’d get from Frontpoint or ADT Pulse (unless you want a traditional, landline-based system).
ProtectAmerica’s broadband and cellular-based options deliver a lot. You can even integrate the system with your Amazon Alexa or Google Home smart device for voice control.
And when an alarm goes off, you can also get a voice prompt from the system telling you which sensor or camera triggered the alarm. When you’re half asleep, this simplicity can pay off! There’s also a panic button which will automatically call for help.
Best for: A homeowner or renter who wants the conveniences of tech-based security with fewer potential complications. Avoid if: You’re shy about a three-year contract.
Vivint Home Security
Contract required: No, unless you’re financing equipment Professional monitoring: Yes Length of contract: At least 42 months (but only when financing equipment)
If you’ve been looking for a no-contract home security solution that still delivers professional results, consider Vivint Home Security. Vivint offers monitoring for a monthly fee, but it doesn’t require its customers to commit to more than one month at a time.
However, if you cancel your account while you still owe money on your equipment, Vivint will bill you for the balance. So even though you wouldn’t have an official contract, you’d still be compelled to keep the service or pay a lump sum to end your connection to the company.
It’s not exactly a no-strings-attached situation, but customers do have more control month to month, especially if they pay up front for the equipment.
Vivint makes this list because of this potential flexibility and because of the flexibility of the company’s equipment.
You can essentially build your own home security and home automation package the way you want. Rather than choosing from a package, you can combine different kinds of surveillance equipment including outdoor monitoring, and different safety features such as smart lighting and thermostat control.
You can manage your system through a Google or Amazon smart speaker or you can use a more customized control panel.
Best for: A homeowner who wants to customize a security solution. Avoid if: You don’t want to pay up front for equipment. If you don’t pay up front, you’ll have a de facto contract.
Link Interactive
Contract required: No, unless you’re financing equipment Professional monitoring: Yes (by a third party monitoring center) Length of contract: N/A unless financing equipment
Link Interactive rounds out my top 5 because, once again, it blends traditional and unmonitored features to give customers the best of both worlds. Link Interactive stands out because it has embraced broadband and cellular networks more thorough than most other providers.
As a result, you can talk with a professional monitor through your control panel at home during an emergency. Sometimes just knowing what’s going on and finding out easily when help will arrive can alleviate stress.
But you should know that Link Interactive uses a third party, which doesn’t always equal a loss in quality, but it does mean the company has less control over the monitoring process.
Still, lots of Link Interactive customers have been satisfied with their service according to TrustPilot and Better Business Bureau reports, which tend to lean toward the negative for security systems.
Link Interactive lets you pay month to month instead of committing to one to three years. However, as with Vivint, if you owe money on your home security equipment, you’d have to pay the balance if you canceled service.
So unless you pay up front for the equipment or pay the balance down enough to make more affordable, you’d likely be sticking with the service for a while.
Essentially, it’s a contract by another name. Link Interactive does stand by its 30-day grace period. If you change your mind or don’t like the service, you can cancel without obligations.
Security matters most, and even though I’ve listed a couple concerns, Link Interactive has the experience (about 70 years’ worth) and the equipment to serve its customers well.
Best for: A homeowner who wants a reliable partner with the best modern conveniences. Avoid if: You don’t plan to stick with the company for at least until you’ve paid off the equipment.
Best Self-Monitored Home Security Services For 2023
I know — I listed my five top choices for home security, and not a single one offers a completely self-monitored system.
I alluded to the reason earlier but here it is again: Professionally monitored systems simply provide better security across the board, and we’re looking for the best home security systems.
In most cases, security tends to be better because you have a staff of monitors at the ready to respond to a crisis at your home.
Most, of course, doesn’t mean all. You may have just the right work-life balance to handle a self-monitored system. Or you might just prefer to self-monitor your home security, either to save money or because you like the control.
If so, you have a lot of choices.
Let’s take a look at a few of my favorites.
Ring Alarm
You’ve probably seen this one on TV. It looks simple, efficient, and affordable.
Overall, it lives up. For only $200 or so up front, you can get a pretty solid set-up and install it yourself. Pricier packages offer more components for larger homes.
You can opt for professional monitoring (for $10 a month or $100 a year) or for self-monitoring, which is free. Ring connects to Z-wave, which means you can incorporate a wide variety of home management and security equipment.
Amazon owns and sells Ring systems, so if you’re a frequent Amazon shopper you’ll know pretty much what to expect.
Best for: A low-cost but useful alternative with professional monitoring available.
Honeywell Smart Home Security
Honeywell, whose name you may have seen on thermostats somewhere along the line, has expanded its business into smart home connectivity, including home security.
You’ll pay more, over $1,000 most likely, to get your system going, but after that, you can do a lot, including arming and disarming the system with a key fob and even integrating facial recognition.
Honeywell’s system works seamlessly with Amazon Alexa, and the system should soon also offer Google Assistant and Apple HomeKit integration.
Honeywell also syncs with Z-wave, which means you can use all sorts of wireless equipment to manage and monitor your home.
Best for: A do-it-yourself alternative that still has top-notch gear and accessibility specializing in self-monitoring.
SimpliSafe
SimpliSafe has grown in name recognition and market share. The company offers a lot of options. About 16 to be precise. They all vary slightly in the number of components and price.
Set-up fees range from about $290 to about $550 depending on how much equipment your home needs. The equipment is easy to install and use. You can go without professional monitoring and keep using the security equipment.
It tends to be harder to incorporate third-party equipment, though. So if you get SimpliSafe don’t assume you can use existing gear from previous systems.
Best for: An all-in-one system for homeowners new to security systems.
Nest Secure
If you use Google products — Google Assistant and the Android operating system, for example — Nest Secure could offer a sensible extension for your home automation and security needs.
Naturally, the service integrates nicely with Google Assistant and your Android phone or tablet. You can spend up to $500 or so getting the equipment set-up.
You can add professional monitoring on a contract or month-to-month basis.
Best for: Customers who already use Nest home automation products. Nest is part of Alphabet, Google’s parent company.
Going Cheap? Create Your Own System And Go Full DIY!
Even though the home security market has changed a lot with the success of self-monitoring systems, customers still have two basic choices:
Enter a contract of some sort to get professional monitoring and pay less up front.
Buy a do-it-yourself system, spending $300 to $1,500 up front, and have the freedom to self-monitor and avoid the contract.
Some customers wonder why they can’t just buy some cameras and door sensors and connect the gear to their smartphone. That may be possible, and if that’s your thing, you could save compared to buying a pre-packaged deal.
But, for the majority of consumers, I do not recommend this approach for a few reasons:
It depends upon your ability to connect and maintain the equipment.
You couldn’t add professional monitoring if you wanted to.
It’s more difficult to self-monitor without an app to centralize the camera feeds and sensor data.
Regional Security Firms May Offer a Lot
I tried to limit this post to companies offering nationwide service. Some regional companies offer great equipment and great service, too.
If you’re considering a regional firm in your area, make sure to check on the following issues:
Who monitors the company’s security systems? Is it local or third party? If third party, try to find out response times for the monitoring service.
Are you as the customer responsible for maintaining the equipment or will the company keep it up to date? If you’re responsible, work that into what you’ll be paying.
Does the system’s control panel have a battery backup during loss of electricity? What about backup for the WiFi connection? If not, the system could leave you vulnerable.
If you have the ability to self-monitor, can you integrate components you already own via Z-wave or another similar service?
What do local law enforcement officials think about the firm? Cops know a lot about home security. They may know the value of a local or regional home security outfit.
Need Proof of Results? Ask Your Insurance Agent
Our homes are personal. Having a stranger violate, steal, or destroy our homes, our property feels like a personal attack even if we’re not home and deal only with the aftermath.
People who have experienced that feeling know it can change the way you look at the world for a while.
It makes sense for homeowners (and renters) to seek some kind of protection against this danger. No system can guarantee your safety and the safety of your family.
But home security systems do get results. For proof, just ask your homeowners insurance company.
Many insurers will give you a discount on your home insurance premiums if you have a professionally monitored home security system. Insurers give this discount because they know a quality home security service will likely reduce the likelihood of a personal property insurance claim.
As you compare systems, consider what kind of security you need and whether what you’re buying fits your home.
Security is personal. It’s up to you to make sure you’re getting a system to match your life.
We invest a great deal of money into our homes—not only in regards to the physical structure, but on interior design, added features, and, of course, the items inside.
To help protect us financially, items often come with a warranty, offering a repair or replacement if the piece breaks down.
Many of us would not think twice about taking out a warranty for our refrigerator or washing machine.
When it comes to our properties, however, many homeowners are not prepared or covered in the event of an incident.
A home warranty can help to protect you and offer both peace of mind and financial compensation, but first you need to pick the right home warranty provider.
About American Home Shield
American Home Shield tops our list of the best home warranties. It is a firm providing home protection plans, which are specially designed to cover some of the most common issues and system breakdowns which may occur within your home.
Operating since 1971, they claim to cover over 1.4 million homeowners across 49 states.
They also boast a team of more than 10,000 contractors who can provide the services you need to get your home up and running.
How It Works
American Home Shield has a simplified process for coverage. The system works on the basis of a twelve-month contract.
You pick your plan, pay a month’s premium, and have your contract activated fifteen days later.
From this date, you are fully covered. Plans come in a range of options and can be paid via monthly payments to help make them more affordable.
How to Make a Claim
If you need to make a claim, you can contact American Home Shields via the website or phone, 24/7. This will put you in touch with a service representative, who will arrange for a contractor to be sent to your property.
It’s important to note that you will only be contacted by your contractor during regular business hours, despite the customer claim line having 24/7 accessibility.
The company claim that all of their contractors are of the highest quality to ensure that their customers remain completely satisfied, though some feedback has expressed concerns with the contractor they received.
How American Home Shield Assesses Claims
Upon arrival, the contractor will request a trade call service fee paid directly to them to start the process for them to diagnose the issue.
They will contact American Home Shield before taking any further action to check that your plan covers the problem before repairing or replacing the system.
While the consensus is that this phase is carried out effectively in most cases, there have been reports of some contractors failing to diagnose the issue after receiving the fee.
Benefits of American Home Shield’s Process
There are some bonuses to the system.
First, your plan is fully transferable, ensuring that you are covered even if you move from your house to another one during your policy period.
The policies are also ‘all risk,’ meaning that everything will be included unless explicitly stated; any exclusions will be made clear to you when you take out the plan.
Types of Plans
As we have mentioned, there are a variety of plan types available, depending on your needs. Pricing may vary according to location but can be paid via affordable monthly payments.
The policies on offer include:
Systems Plan
Usually retailing at around $32 per month, this covers the repair or replacement—where possible— of any components in the air conditioning and heating units of your home, as well as plumbing and electrical systems.
Appliance Plan
Like the systems plan, this coverage is offered at around $32 per month. The appliance plan covers components in refrigerators, dishwashers, washers and dryers, and other key household appliances.
If the appliance is covered, either a repair or replacement will be carried out, depending on what is needed.
Combo Plan
Offered at around $42 per month, this option combines the Systems and Appliance plans, providing all of the benefits of both with financial savings.
If you like the comprehensive coverage offered by both types of policies, the combo plan is an excellent way to save money.
Build Your Own
As the name suggests, this policy allows you to cover at least ten items, while picking and choosing the coverage you need. The price is dependent on what you prefer.
Each monthly payment can also be adjusted by altering the trade service fee which is paid to the contractor when they visit your home.
The set amounts are for $75, $100 and $200; the higher priced options will reduce the price you pay per month.
What is Covered
Each plan is different, but there is a general list of appliances and components which are covered by the policies:
Covered Under Systems Plan
Air conditioning (including ducting)
Electrical
Heating
Plumbing
Garbage disposal
Water heaters
Instant hot and cold water dispensers
Ceiling fans
Central vacuums
Doorbells
Smoke detectors
Covered Under Appliances Plan
Dishwashers
Refrigerators
Clothes washers and dryers
Ranges, ovens, and cook tops
Freestanding ice makers
Built-in microwaves
Garage door openers
Trash compactors
Built-in food processors
Add-ons
As a bonus, there are a few optional add-ons which can be purchased as part of the build your own plan.
Elements covered here include:
Pools and spas
Well pumps
Septic pumps
Water softeners
What is Not Covered
As with any policy, it is essential to be aware of what is not included. The fine print of the paperwork includes a few stipulations.
Be sure to consider the following factors:
Exact items listed: If you have updated your dryer but not informed American Home Shield, you will not be covered for that item.
Malfunctions covered by a warranty: If an item is covered by a manufacturer’s warranty, American Home Shield reserves the right to decide whether the item will be replaced or repaired or not.
Selection: Homeowners also do not get to choose the item if it is replaced; this is at the discretion of the contractor and doesn’t have to be a match in terms of the color, model, size, or brand.
Cash alternatives: If the contractor decides that they cannot repair the component, they may also offer a cash alternative.
It is always worth reading the small print before signing for a plan or policy as it will make your life easier and eliminate any expectations or confusion in the event of a claim.
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Advantages and Disadvantages of American Home Shield
Pros
Pros of taking out a policy include:
Adaptability: A range of protection plans which can be adapted according to your needs
Comparison: The monthly repayments will almost certainly cost less than repairing or replacing your appliance or system as an individual
Access: You can file a claim 24/7
Coverage: Offers protection and reassurance even after the expiration of a manufacturer’s warranty
Cons
Time: Contractors will only contact you and carry out work during regular business hours
Quality of Contractors: There have been reports of some low-quality contractors being sent to the home of customers, and those who are only interested in the fee
Cost: Building up some savings and a network of reliable tradespeople may be a cheaper alternative
In Conclusion
Taking out a home protection policy can be a great way to protect your home and belongings, providing peace of mind and a financial safety net if anything goes wrong, and eliminating the need to worry or search for a contractor to fix the problem fast.
American Home Shield offers a variety of flexible and affordable plans to suit every lifestyle and budget and help to protect homeowners from high bills later on.
As with any policy, however, exclusions and exceptions apply, and it is a good idea to make sure you are fully aware of these before committing.