Homeowners insurance will cover you if a tree crashes on your roof or if a fire breaks out, but for misfortunes like a blown water heater or a shorted electrical system, you’re on your own when it comes to repair costs.
To help homeowners afford the costs of maintenance repairs, companies across the country are offering home warranties or emergency repair insurance. This type of insurance can cost as low as $25 a year and up to $500, and typically covers repairs to plumbing, hot water heaters and air conditioning systems and a home’s electrical system.
“It simplifies the cash management and process of getting them fixed,” says Thomas Rusin, chief executive officer at HomeServe, a home emergency insurance provider. “When you walk into the kitchen and there’s water running out of the sink most people think ‘I don’t have the time for this and how much is it going to cost?’ For around $100 we take care of all that.”
While many home warranties cover the entire home, HomeServe offers its insurance ala carte. Homeowners can determine what risk they want to take on their own and what they would want insurance to cover. For instance, some homeowners may not feel it’s necessary to insure their electrical system but want to have their plumbing protected. According to Rusin, the company’s average annual premium is $125.
Companies like American Home Shield, a home warranty provider, take a different approach. The company offers different plans that cover a group of potential repairs. American Home Shield offers a home system plan that covers central heating and AC, hot water heaters and plumbing. The appliance plan covers refrigerators, ovens, washing machines and dryers. There’s the combo plan that covers all the above repairs, and homeowners can also purchase add-on coverage for things like swimming pools, spas and well pumps.
There’s always the risk of never using this added coverage, but proponent argue that it provides homeowners peace of mind and can really come in handy when a major repair is needed and you’re short on cash.
According to a recent survey by HomeServe, one in five homeowners are delaying repairs because they can’t afford them, don’t have the time to fix them or can’t find a reputable to work with. What’s more, according to the National Foundation for Credit Counseling, 64% of Americans don’t have $1,000 in savings to cover any emergency repairs in the home.
With HomeServe, the buyer decides what to cover with the plan. If you want the exterior water service line, sewer line or gas line covered, or you can have your plumbing and drainage protected. Other insurable things include exterior or interior wiring, heating or cooling systems and water heaters.
When something goes wrong, like a pipe bursts, the homeowner calls HomeServe’s toll free repair line and a local, licensed and insured contractor will be dispatched to the home to fix or replace the problem. HomeServe pays the contractor directly and guarantees all the work.
To protect against preexisting problems, HomeServe has a 30-day waiting period which means a homeowner can’t file a claim until the 31st day. “If you’ve got a big problem with the water system you’re not going to wait 30 days to get it fixed,” says Rusin.
With more than 1.2 million customers, Rusin says plumbing is a popular coverage choice with water and sewer lines a close second. Many homeowners aren’t aware they are responsible for outside lines connecting their home to the street, and when they break, it can cost the homeowner on average $3,000, he says. “They break at the same rate as car accidents and most don’t know the y are responsible.”