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

Show NotesDifferent Insurance Profit MarginsProperty 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’ PerspectiveConsumer 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.comIt is best to go directly to the BBB’s website and find A or A+ rated companies and contact them directly.ResourcesBudgeting tools and other free resources - https://leosabo.com/resourcesDavid’s website - www.stewardshippastors.com