Our mortgage company recently announced the availability of SystemsProtect in our area. The plan apparently offers full repair/replacement of HVAC, plumbing system, clothes washer and drier, garbage disposal, electrical system, and ceiling fans. 24/7 service availability. There is a $60 deductible per occurrence, and a $29.95 monthly fee. SystemsProtect is not affiliated with our mortgage company. They are simply offering its availability as a courtesy.
There are certain restrictions which seem reasonable. There is also a broader service plan that includes kitchen appliances with a $34.95 monthly fee.
I'm asking for opinions and/or personal experience because we are in our
60s and probably not capable of making most of the repairs ourselves, nor financially able to pay for or replace the big ticket items on a moments notice. We could afford the monthly fee easily within our budget.
There's absolutely no reason for your mortgage company to do this for you "as a courtesy." They are getting paid one way or another.
(snip)
I took a quick look at their sample plan. With the monthly fee, $60 deductible, and numerous limitations and exclusions, it doesn't seem to offer much benefit. If you have a claim every year you might break even. For example, if your water heater breaks in a way that's not excluded from coverage, you'll get a maximum of $500 toward the installation of a "base model that meets all applicable federally mandated minimal manufacturers? standards." For this $500 coverage you've paid $360 in monthly fees.
You can find the expected customer horror stories if you search for some of the many names they do business under:
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If you can easily afford the monthly fee then you can easily start setting aside that amount each month in case you _do_ have a big ticket repair. If an appliance dies and you don't have enough saved you can always get a monthly payment plan (read: store credit card) from any of the big retailers.
They want $420 a year. How much have you spent on repairs in the past 10 years?
Put $35 a month is the bank and you have a good head start. Your mortgage company is making it available because they get a cut of the profits on sales, not because they like you. Most home warranty companies use cheap labor, cheap appliances and often leave people very unhappy.
Maybe I'm overly suspicious, but it sounds as if the OP is promoting the plan, not so much asking opinions... Hopefully I'm wrong. (It happens often). Mark
No, Mark, I'm not promoting this in the least. I really wanted advice. From the 3 other responses, it's clear that this is *not* in my best interest, and I now have no intention of buying into for myself.
We could afford the monthly fee easily within our budget.
3rd party insurance schemes seldom are a good deal for anyone except the third party.
First, you may want to make sure that your homeowner's insurance covers damage to your household goods at replacement value (not depreciated value). Hopefully your insurance will also cover damage from a nearby lightning strike that caused an equipment-fatal power surge.
Second, consider adding a whole-house surge suppressor, since aside from floods, tornado or hurricane storm damage the most likely cause of having more than one appliance fail at a time would be a power surge due to lightning. This could also give you a discount on your homeowners' insurance.
Third, you could probably handle replacing one item if it became necessary -- and in fact you'll probably want to replace an air conditioner unit or a refrigerator some time in the future.
To make sure you have the funds for that, instead of paying for the service, arrange to deposit $29.95 each month into a savings account -- pay yourself instead of the company. In two years you'll have about $750; four years about $1600, etc. Within a few years you'll have enough capital to cover almost any appliance emergency, or you can upgrade to better items if you want. If you're worried about the discipline, set it up so the amount is automatically deposited before you even see the money.
snipped-for-privacy@yahoo.com had written this in response to
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: Systems Protect home service plan is a Rip Off. In their marketing letter it mentions that they pay for repairs of major home systems and appliances " no matter the age, make, or model", but when my air conditioner stopped working, they did not cover the cost because, "it showed signs of rust". Customer Beware!
Wayne Boatwright wrote:
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replying to Wayne Boatwright, Joe wrote: Yes, last year our HVAC unit went belly up. The compressor had an internal leak so was not cooling properly. The system was 17 years old. I called the required number, late in the day, and within 15 minutes received a call from a local provider who came the next day. The system came from out of town so had to wait an extra day for the unit to be installed. Because of the age of the system they installed a completely new condenser unit. Getting a $2000 unit for $75 was a bargain in my book. Both the SystemProtect and Service persons were friendly, knowledgeable and knew what had to be done quickly. The service company was prompt and performed the work in a professional manner. The system had been working just fine in our 100 plus degree heat. I would recommend them in a heart beat.
Yes you are right, so we got a $2000 unit for $75 and another $319.50 in payments for the plan. Still better than $2000 plus the service call and labor that I would have been charged if not for the plan. Do you know what it costs just for some one to come out to take a look? I am keeping track of payments versus benefits and so far I am way ahead. When it comes to all the appliances and other items in a household you have to be prepared in one way or another. How many of you will keep that money in a special account for that rainy day? That is why we have auto insurance and fire insurance too. How many of you can put enough money aside to cover everything within a reasonable time frame. It would have taken 6 plus years of savings just to cover the cost of the unit and that does not include the service call or the labor. Just depends on how you look at the bigger picture.
You did well. For every one of you, there are thousands that do not.
I've been a homeowner for 50 years now. I've never paid for extended warranties and I don't know that I'd ever have collected. Like you, I'm thousands of dollars ahead, just that I'm on the other side. See where you will be in another 10 or 50 years of paying premiums.
In the early yr]ears, starting a family it was not easy to save money, but over time, you'll see how it adds up to save those premiums and be able to pay cash for any repair or replacement.
What's still missing here again is the rest of the story, ie how long it took to run up the $320 in payments for the plan. Obviously the failure occurred in the early years.
I'm not totally against extended warranties. There are rare exceptions where they can make sense. As an example, I was shopping for a dehumidifier and I know they typically only last a few years. I had researched the prices online and had found one that I could buy for a good price, I think it was about $175. I went to a local appliance store. In negotiating, the manager finally offered a deal that was about $30 more than the online price, with a 3 year extended warranty bundled in. Because they have a relatively high failure rate and combined with the fact that I could walk out with the unit right there, bring it back there if it blew up, etc, I bought it.
Two years later, it was kaput and I brought it back. And of course that's when the next game begins. They no longer have that model. The closest model they have is a slightly larger one and they want $35 more for it. I ask about just getting the existing one fixed. Answer is they have to send it out, don't know when or if it will ever come back. So, given the options, I paid the $35 extra and wound up with a new one for the $30 + $35 = $65. In that case it happened to work out.
But overall, I'm with you. That's the only extended warranty I've bought. The comparison he makes with insurance is a good one. The big difference is that it's difficult or impossible to self insure a house or insure a car for liability. You could have a $200K+ event, which is two or three orders of magnitude larger than any home system repair. And even with insurance, I self insure when possible. When I have collision insurance on a new car, I have a $2000 deductible and when the car gets older, I'm looking at the cost of the collision insurance versus the value of the car, looking to drop it when it doesn't make sense anymore.
And I've heard plenty of bad stories with the warranty companies. When you have it, you're subject to doing whatever they are willing to do. If you want to do something else, then what? Suppose you had a basic AC system and 15 years in it has a bad compressor. The warranty company could decide to just replace the compressor. If they replace the whole thing, then you get what they will give you. How about if you want a more efficient unit, better unit, etc? I'll bet then the games begin because you're not in any position to negotiate. So, to each his own, but I'd rather steer clear of that added expense and drama.
replying to Wayne Boatwright, Maggieodae wrote: Worst home warranty ever. Just had their contractor out to fix water heater. $75 deductible my ass. All tole it was $1200. they said they paid over half. BS. WH's don't cost $2500. Avg cost is $900 to $1200. I got ripped!!!!!!!!! Stay away from SystemProtect. Rip off!
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