Home Warranties: The Basics

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If you own a home, you almost certainly have homeowner's insurance. That type of coverage is crucial, but it doesn't do a thing for you when appliances and systems break or fail due to normal wear and tear. Could you afford to repair or replace a major appliance in your home if it stopped working tomorrow? If doing so would be a struggle, or if you'd just like to avoid the headache and stress of forking over huge amounts of money to repair or replace systems and appliances in your home, 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. 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. The rest of the cost of the repair or replacement is covered by the home warranty. 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 fine 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 it Works

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 repair company in your area. 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. 

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