Does a home warrent alleviate the need for caped budgeting?

[Cameron Rockwell]

Hello everyone, I recently got back from an investment meeting and I asked the question “Does a home warranty alleviate the need to budget for capital expenditures? Everyone in the group seemed to be 50/50 as some said that a good warranty will cover everything used for capex budgeting. Any information helps.

[Cassi Justiz]

So a home warranty is going to cover most of your cap ex expenses IF you pay extra to get that coverage. The basic ones that I have looked at don't cover major plumbing outside of small leaky fixtures, hit or miss on HVAC coverage, etc. 

Another thing to consider with the home warranty companies is that they are in it to make a profit. Typically they are looking at the cheapest route of repair that will fix the problem. I've heard stories about it taking 3-4 service calls and several weeks to get a replacement water heater or a 2+ week turn around time for service calls. So it can definitely hinder the timeliness of repairs if you get a company that isn't on their A game. 

So before you bank on a home warranty instead of cap-ex savings, I would check to see what all systems and structures they cover (you need to plan for fences, roofs, mechanicals, etc). I would still plan on saving some amount of reserves outside of your basic repair reserves for other high cost expenses like insurance deductibles/claims. I put deductibles and cap-ex into the same mental category even though I don't split them into different bank accounts.