There is no telling when home appliances will malfunction, or systems will unexpectedly falter. This makes having a safety net for these appliances a necessity. This is where home warranty plans come into play. These plans are designed to provide financial security to homeowners. They offer a buffer against the inevitable wear and tear on property. The average coverage cost of the home warranty plans can amount to $250 to $600 annually.

What is a home warranty?
A home warranty is a contract of residential services that covers the cost of maintaining appliances and household items for a specific period of time. It is important to note that a home warranty plan or home appliance warranty plan is different from a homeowner’s insurance or structural warranty plan. It is often advised to buy a home warranty plan when purchasing an old property, especially when there is little information available about the appliances.

How does it work?
As the name suggests, a home appliance warranty covers damaged appliances and system repairs. The warranty company works with a network of home service providers. Once a claim has been received, the warranty company sends one of the providers to assess the damage. This partner provides a report to the company.

What is covered?
The report received by the warrantor helps determine the potential cause of the damage and the extent to which it has affected the appliance. The company will then confirm whether or not its contract provides coverage for the kind of damage suffered by the system or appliance. If the claim is approved, the warrantor sends back its partner professional for the repair and replacement.

Most home warranties provide coverage for stoves, water heaters, and refrigerators. They may also cover systems like electrical, HVAC, and plumbing. Before signing up, one should check the plan to see if it also covers garage door openers. Some plans need to be upgraded to ensure they are covered. Always read the fine print to understand coverage conditions and exclusions.

What is the difference between home warranty and insurance?
Both homeowners insurance and home warranty plans come with claims, deductibles, liabilities, and premiums. But they are not the same thing. Home insurance provides coverage in case of any damage to the home or the structure itself. On the other hand, home warranty plans provide financial aid for the damage caused to the systems and appliances of the property.