The renewal notice spent six weeks on our fridge under a pizza-place magnet. Every time I reached for the milk I read the same line: keep your coverage for just $51 a month. On April 19 the plan expired, one year to the day after we closed on the Cape, and we let it go.
Our sellers paid for a year of a First American home warranty as part of the deal. We never would have bought one ourselves, but it was free, and it covered the big systems in a house where the furnace went in when I was still in diapers. So for twelve months we had a phone number to call when something broke, and I slept a little better because of it.
What year one actually covered
We used it exactly once. In January the furnace started making a rattling hum when it kicked on, and one morning it stopped lighting at all. I called the warranty line before work, paid the $100 service fee, and a technician showed up the next afternoon. He replaced the inducer motor, the small fan that clears out exhaust before the burners light, and the house was warm again by dinner.
I never saw a price for that part or the labor, so I honestly don't know what the repair would have cost us without the plan. A few hundred dollars seems likely. Either way, one $100 fee in a year somebody else paid for was a good deal, and I'm not going to pretend otherwise.
The renewal math
Renewing would have cost $612 a year (that's the $51 a month) plus $100 every time we called. Before deciding, I opened the house sheet, the Google Sheet where I've logged every dollar we've spent on this place since closing, and added a tab for everything a plan would cover, with an age and a rough replacement guess pieced together from Gary, my dad and a lot of reading:
- Furnace: 1998 Carrier, 27 years old. Replacement somewhere in the $5,000 to $8,000 range.
- Water heater: 2009, 40-gallon gas, 16 years old. Maybe $1,500 to $2,000 installed.
- Central AC: 2011 Goodman, 14 years old. A few thousand dollars, and probably not soon.
- Sump pump: 2009, no backup. Cheap to replace, expensive to ignore.
- Fridge, range, dishwasher and dryer: somewhere in the 2010s, judging by the serial numbers. Several hundred to about a thousand each.
Then I did the boring part. At two calls a year, the plan costs about $812. Over five years that's roughly $4,000, which only comes out ahead if something big breaks and the contract pays most of it. So we read the sample contract, slowly, at the kitchen table. As we read it, there were limits on how much it would pay for some items, and things like code upgrades, permits and hauling away the old unit weren't included. In a 1952 house, code upgrades are exactly where the surprises live. That didn't make the plan worthless. It made the brochure number feel a lot smaller.
What we did instead
We set up a house fund. On May 1, $150 moved from checking into a separate savings account, and it will do that every month. The rules are simple and written at the top of the sheet: the fund pays for repairs, meaning things that break. Projects, like the floors we want to refinish, come out of our regular budget. If the fund is short when something big fails, regular savings tops it up.
$150 a month is $1,800 a year, which is more than the plan would have cost. The difference is that if nothing breaks, the money is still ours. Tessa summed it up while signing the transfer form: "If nothing breaks, we keep it. If something breaks, we were paying either way."
Here's the part I don't want to gloss over. The fund started at zero two days ago. If the water heater quits this fall, there might be around a thousand dollars in it, and the rest comes out of savings. If the furnace dies in January, that's a much bigger hole, and a warranty might have softened some of it, after fees, limits and whatever the fine print says about old venting. We're choosing to carry that risk ourselves because we have some savings behind the fund and we'd rather pick our own repair people. That trade makes sense for us. I can easily picture households where it doesn't, and if you're weighing one, the actual contract is what tells you, not the mailer.
In my day job this is a safety stock question. You don't keep enough on the shelf for every possible failure, just enough to get through the likely ones without panicking, and you watch your oldest items more closely than the rest.
So there's a new column on the house sheet called "expected life left." The water heater's cell is already a little yellow, and I've started glancing at the floor around it every time I go down to switch the laundry.
