Thinking About a Home Warranty for Your Small Business? Consider These Factors First

Small business owners already have enough on their
plate and don’t want any unnecessary stress added. Between managing employees,
talking with customers, and planning for the future of your business, the last
thing you want to worry about is an electrical issue or major appliance failure
bringing everything to a halt. And while insurance is an important necessity,
it doesn’t always cover everything. That’s why some business owners have turned
to home warranties for extended peace of mind. But are home warranties always
the best option for your small business? Let’s look at the costs associated
with them, the advantages they provide, and what you should consider to make an
informed decision.

The
Costs

The idea behind a home warranty is to limit the amount
of unexpected costs for your business in the case of a failure. However, to
mitigate that risk for the future, a home warranty requires payment on the
front end via annual premiums. Similar to the way an insurance policy works, home
warranties require payment now for added protection that will come in handy
later.

Depending on where your business is located, the costs of a home warranty will vary. For those in the US, states in the northeast have higher average annual premium costs compared to those on the west coast like California and Washington. There are many variables that go into premium pricing, but states like Connecticut — which has the highest average annual premium costs in the US at $679 — tend to have older structures and much harsher weather. On the other hand, states like Washington on the west coast generally have newer buildings and much less severe weather so the average plan costs are less.

Besides location, it’s also important to factor in
other fees when addressing the costs of a warranty. Remember to carefully
consider the deductible that you’ll be pay out-of-pocket and the service fee
that has to be paid for any services that do occur during your contract.

Lastly, you’ll need to consider what appliances or
fixtures are worth purchasing a warranty on in the first place. If you’re
purchasing a warranty on more than one item, even more savings can be had for
bundling various warranties covering systems and appliances together.

The
Benefits

Of course, buying a warranty comes with benefits that
need to be weighed with the costs as well. With that annual premium being paid,
warranty holders are protecting themselves from potential financial burdens in
the future. For example, a small business operating in the south may run into
an issue with their A/C unit during the middle of July.

Whether you’re operating a storefront with customers
or a small office building, there’s not going to be much work getting done in
90 degree weather with no A/C. If you’ve purchased a warranty covering that
unit, you’ll be in a much better position for repairs or replacement.

According to HomeAdvisor, the national average for A/C unit installation in the US is $5,425. If you purchased a plan covering your central air system, then even though you paid a higher annual premium, you’ll avoid a large necessary expense to keep business running smoothly.

The
Bottom Line

When it comes to preparing for the future and
insulating your business from unexpected expenses, owners have a lot of options
to choose from. Home warranties can offer significant peace of mind for those
concerned about major appliances and systems failing but may not always be the
best option for everyone. While there are certainly some advantages that come
with a warranty, make sure to consider the specifics like what the premium is,
your deductible, what’s covered in your plan, and what the out-of-pocket costs
would be without the warranty — that plan may not turn out to be what you
hoped!

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