What Factors Contribute to a Home Warranty Cost?

There are several factors that contribute to a home warranty cost. The overall value of the various covered items would make up the largest portion of the home warranty cost. Since many policies differ in what type of items qualify or how each would be serviced, this is an important factor to consider. Location is another trait that warranty companies factor into the overall price since some regions are more prone to damage from natural elements. Other factors that affect home warranty cost could include where the items were purchased, existing warranties from manufacturers, and the efficiency ratings of the products.

The home warranty cost can drastically vary between one company and another because of the coverage that they provide. For example, a premium policy could include unconditional replacement coverage on any appliance or unlimited labor on defective items. Some budget policies will only provide the first two hours of labor or up to a set annual amount in part replacement, which leaves the consumer in a bind in the event of a fire or other natural disaster. Choosing a warranty company that provides excellent coverage often costs 20 to 50 percent more than a budget policy, but the service differences are substantial.

Another factor in home warranty cost is the actual items that are covered. While most policies cover major appliances, some of the more comprehensive ones also include protection on air conditioning units, electronics, and even electrical systems. New construction homes are often eligible for additional features like roof and foundation warranties, but some older residences can qualify as well by having the property inspected.

It is also important for consumers to realize that in many cases, they are paying for a home warranty cost twice. Some companies will offer discounts if an appliance is still under the manufacturer's warranty, but the majority of them do not factor this consideration into their price. Likewise, in some cases, it is more cost-efficient to extend an existing warranty with some companies instead of purchasing a separate policy. Most home warranty cost analysts will list the efficiency ratings of the covered items and take that into consideration since these items tend to last longer.

A consumer's location is also a factor in home warranty cost, and living in some regions can make it very expensive to purchase a quality warranty. Coastal areas that are prone to flooding often require much higher premiums, as do areas that see extreme weather changes during some part of the year. In fact, areas that are exceptionally hot or cold could also increase the home warranty cost because appliances and air conditioners have to work harder in order to complete the same job.