Thanks Nick. Good article.
Does your advice include 90 Day Widget Warranties?
I would agree with the conclusion of the article for people who already own a home. I have experienced a lot of the negative observations made in the article first-hand.
As a former practicing Realtor (still licensed), I would have to point out that they do perform a useful purpose in the real estate transaction by easing concerns regarding latent defects in major systems. When the Seller pays for a home warranty chosen by the buyer (which is the case in most transactions in my market area) the buyer is more comfortable in proceeding with the transaction. Also, a buyer who receives a payment for a failed furnace or other item is much less likely to sue the seller for damages, so the seller has incentive to provide this.
Yes, AHS and other home warranty companies take in more money than they pay out. That’s their business model. I also agree that in the long run an homeowner is better off self-insuring against system failures, but when our furnace went out 6 months after moving in, I’m glad the seller footed the bill for the warranty. A $50 deductible was all we had to pay and we got a new furnace.