GMR 165: Home Warranties - Are They Worth the Cost?

Show Notes


Different Insurance Profit Margins


Property Casualty Insurance averages a 2.7% profit.


Life insurance companies had an average NPM of 9.6%.


Home Warranty - 20%+ Profit Margins - EBITA


 According to Dave Ramsey, a personal finance expert, about
85% of the home warranty amount is absolutely profit and
commission to the people.


Professional Sources’ Perspective


Consumer reports recommend that you take the money you would pay
on a home warranty, and put it into a savings account for
repairs. If you want to review any home warranty company
that you’re considering purchasing, the best way to do this is to
look online at reviews of the company and check the Better
Business Bureau. 


State Department of Insurance says, “the major struggle is
the difference between what the customer expects, and what the
warranty actually covers.”


Things you should know:


Contractor quality - Good contractors usually do not need to work
with home warranty companies.


What’s covered and what’s not covered - repair versus replace.
The company has the final decision on what they will fix or
replace, and it doesn’t matter if you agree.


If an item is to be replaced, the model is not up to the
customer.


They choose the contractor, not you.


They might declare that there has been too much wear and tear,
improper maintenance, or improper installation. May have
additional fees for uncovered expenses, installation, disposal,
and labor. 


Example: Fridge might be covered, but ice maker is excluded.


Power surges or similar circumstances will not be covered.


Limits on yearly allowed repairs, usually not very high.


Company ratings and reviews:


Be wary of online search reviews. They are often false and made
up to make less than stellar companies look trustworthy.


Don’t trust the customer testimonials that appear on a home
warranty company’s website. You will likely find mostly five-star
ratings and rave reviews. One company offered glowing reviews on
its website, but at the BBB’s website, the firm received a
one-star rating on average based on 593 customer reviews. It,
too, gets a B rating from the BBB - Bankrate.com


It is best to go directly to the BBB’s website and find A or A+
rated companies and contact them directly.


Resources


Budgeting tools and other free resources -
https://leosabo.com/resources
David’s website - www.stewardshippastors.com