Many people feel that warranties, including home warranties, are just ways for companies to squeeze more money out of consumers. If you think about it, why would they offer to repair or replace anything if they make them well in the first place, aside of course from tacking on a little more to your bill? Understand that not all companies do it just for the money, and some are genuinely concerned with user satisfaction, which actually generates more profit than the warranties themselves.
As a producer, no matter how well you design your processes such that there is as little chance as possible of a consumer experiencing a malfunction, there will always be that tiny chance something will go wrong that is your fault. When this happens, you can make things up to the consumer by obliging the warranty. In turn, the user will be happy about your service and become more loyal to your brand. This means that he will be more likely to buy stuff from you in the future, as well as spreading the word about how reliable your company is. Warranties, when offered and obliged, are actually devices to create public trust and generate more profit based on public opinion.
The same principles apply to home warranties. Homebuilders and appliance makers make their products such that it is very unlikely that something will go wrong when you, as a consumer, use it. Unfortunately, they cannot test every single instance to the full extent. Thus, malfunctions and defects may manifest only after some period of real-life use. When this happens in a home, then home warranties can be particularly useful.
For example, your air conditioner does not seem to be working properly. It will not turn on even if you programmed it to, and it never seems to be as cold as it should. What’s worse is that you had bought the fully-furnished house just last week. You call up your real estate agent who sold you the home warranty. The real estate agent contacts a representative of the company that manufactured your air conditioner, to inform them of the problem. The company contacts you and asks when they can send someone over to check it out. Upon inspection, they discover that the micro-computer controlling the unit is damaged, and there is no way you could have had anything to do with it. They then offer to replace the entire unit, if you could care to wait for a day or two. You of course say yes, and pay for nothing more than just a small trade service fee.
The above situation is ideal, to say the least. Though such clean-cut open-and-shut cases are rare, incidents of breakdowns of new components in a short period of time of use are not quite as rare. If you should be unfortunate enough to be that one in how many people that does experience a breakdown in a fully-furnished home not long after buying it, then a home warranty can be a real help. Just remember that like any other warranty, home warranties cover differing components and have varying terms, so make sure to understand well before committing to any purchases.
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