Should You Buy A Home Warranty For Your Small Business?

According to statistics in the U.S., the national average repair cost of an appliance runs $170. Typically, the cost ranges from $105 through $236 with $50 on the low end of the spectrum and $350 on the high end. However, these costs do not pertain to business premises, operations, and facilities which can run significantly higher than that. Small businesses have a limited budget with which they must make ends meet day-to-day, and month-to-month. Unlike home appliances, which are used by a small group of people, business appliances and systems include large-scale HVAC units, refrigeration systems, industrial washers and dryers, etc. So, should you buy a home warranty for your small business?

Factors to consider before buying a small business home warranty

The costs of repairing and maintaining such appliances and systems can be extraordinary. Like it or not, the bigger appliances such as dishwashers, refrigerators, freezers, industrial washers and dryers, HVAC systems need regular maintenance for optimal performance. The costs of maintaining the systems and appliances can quickly run into thousands of dollars. While the aforementioned costs indicate the national average figures for repair and maintenance work, there are significantly higher fees involved with business systems. For example, fees must be calculated according to the following 3 critical components:

1. The labour costs involved
2. The cost of mechanical parts
3. Service fees for repairing the systems and appliances

Hiring a Technician for Repairs

Be advised that technicians and repair people can charge upwards of $200 per hour, and even if the appliances require small fixes, the full hourly rate will typically be billed. This is known as a callout fee, and could easily be applied to something as simple as changing a fuse.

Contractors are as varied as the appliances they repair or replace. For starters, it’s important to understand how your business will cope with system repairs and replacement parts. Does the contractor accept all forms of payment (credit card, bank wire, online payments?), Does the home warranty company cover any damages that may arise during repair work? And finally, will the home warranty service and/or the contractor offer you a written guarantee that they will make good on their repairs?

These are important issues that need to be considered with any contractor working for a home warranty company.

Repair and Replacement Costs

Consider that the costs of replacing a typical air conditioning unit for a small business can run as high as $2,000 or more. Businesses operate on a tight budget, and these unexpected costs can quickly spiral out of control and create cash flow problems for the operation. This may necessitate additional lines of credit, creating additional burdens on the company.

To avoid such issues, it is certainly worth considering home warranty services to cover any of these eventualities as they arise. Consider that the average costs of repairing or providing replacement parts for a freezer and/or refrigerator can range between $200 and $400. An ice maker repair job typically costs on average of $330. These costs can break the bank for a small business.

Before you rush out to purchase a home warranty plan, it’s important to identify a few components of your appliances/systems. First of all, what is the age of the appliance? Experts agree that for every $100 spent on an appliance, you can expect 1 year of usage from it. For a $500 – $1,000 appliance, you can expect between 5 years and 10 years of usage.

Determine where your business appliance is at on the timeline, and gauge whether a home warranty is a worthwhile investment. If your business is a laundromat for example, the cost of repairing a washing machine can range between $120 and $500 per project. Many types of issues are possible including mechanical failures, leaking, standing water, wobbling and an inability to drain water.

Much the same is true with other appliances like dryers. However, dryers have other problems such as thermal fuses, igniters, sensors, and belt replacement issues. The cost of repairing a gas dryer can be as high as $150, but heating elements can cost upward of $200.

Getting the Best Coverage

As you can imagine, it’s a challenging undertaking finding the perfect home warranty company for your business. It would be exceptionally tedious going through each company’s range of plans, costs, and reviews. Fortunately, the experts have conducted reviews of 14 companies that are ideal for business home warranty purposes. These companies have passed the litmus test in terms of attention to detail, low-cost services and repairs, comprehensive coverage and high user ratings. It is worth using aggregator platforms to compare the services offered by home warranty companies to ensure that you are getting the best deal and the best coverage.

By Samantha Acuna 

Samantha Acuna is a writer based in San Francisco, CA. Her work has been featured in The Huffington Post, Entrepreneur.com, and Yahoo Small Business.