The Basics of a Home Warranty Staff
Couple moving into new home
If you own a home, you almost certainly have homeowners insurance. While that type of coverage is crucial, however, it does not help you out when appliances and systems break or fail due to normal wear and tear.

Could you afford to repair or replace your refrigerator, for example, if it stopped working tomorrow? 

If replacing an expensive appliance would be a financial struggle, or if you'd just like to avoid the headache and stress of dealing with the repair or replacing of home appliances, a home warranty may be right for you.

What is a Home Warranty?

A home warranty is essentially a service contract. In exchange for a reasonable annual fee, most of a home's major appliances and systems, including electrical, plumbing, heating and cooling, are covered by warranty protection. Different companies offer varying coverage, so be sure to read the fine print. In the event that a major appliance or system requires repairs or needs to be replaced, you're only responsible for a small service fee, which for most companies is at about the $60 mark. The rest of the cost of the repair or replacement is covered by the home warranty company. In this way, home warranties make it easier, more affordable, and more predictable to maintain a home.

What is Covered?

Coverage varies from one home warranty to the next, so it's crucial to read the small print with care while shopping for a plan. However, the majority of home warranty plans cover plumbing systems, heating and cooling systems and electrical systems. They also cover most major appliances, including dishwashers, garbage disposals, ovens, ranges and water heaters.

Standard home warranties don't typically cover washers, dryers, refrigerators, spas, pools, garage door openers or outdoor systems and components. However, it's often possible to extend coverage to such items for an additional fee.

How to Make a Claim

Once you've secured a home warranty, using it is easy. When a covered system or appliance breaks down, place a call to the home warranty provider. The provider then contacts an authorized technician or repair company in your area. The repair company is often established in the local neighborhood as a quality worker. The repair company then gets in touch with you to schedule service. After diagnosing the problem, the technician either performs the repair or obtains and installs a replacement. You never see the actual bill; instead, you just pay a small service fee to the home warranty provider.

Regardless of your financial situation, the condition of your home and other variables, you're sure to find a home warranty to be worth it for the peace of mind alone. Start researching home warranty providers to find one that's right for you. Staff's editorial staff is a professional team of editors, writers and experts with dozens of years of experience covering consumer, financial and business products and services.