It is unbelievable—the vast majority. About 12% of the extended warranty or the home warranty or the electronics warranty is actually the risk that you’re taking. In other words, the cost of the average item breaking down within the warranty period usually runs about 12%. The rest of what you’re paying is profit, commissions, overhead and marketing costs. I would rather just take the chance. Put $. 88 in my pocket of every dollar—$888 of every $1,000 that I would’ve spent on warranties and $12 in savings, and on average, I’m going to cover the breakdown that those warranties would’ve covered. The big items, you transfer the risk on. That’s why we buy life insurance. That’s why we buy homeowner’s insurance. If your house burns down, you can’t self insure through that one.
hsa home warranty coverage and cost
4. That means for every dollar the warranty company collects from their clients, they pay out 8 cents on the dollar for claims. You can actually get better odds in Vegas. I received a home warranty when I bought my home from the estate of the previous owner. It proved valuable, since the previous owner had not kept up maintenance for some years. The warranty paid for replacement of the frozen main water shutoff, fixing an unsteady toilet and fixing a leaky tub drain fixture. That said, the quality of some of the work was not great. The toilet was unsteady because the tile floor on which it sat was uneven. The "fix" made was replacement of the wax sealing ring, which made the toilet steady for a few months but was not really a permanent fix. I ultimately set the toilet in a bed of grout to get a lasting fix. The second issue I had with the quality was that the "fix" for the tub leak would have left me with a $7 plastic drain in place of the original Eljer chrome plated, solid brass, triplever pop up bath drain which would cost about $400 were it still available.