Terms and Coverage

• Home warranties are normally sold as a one-year renewable contract on a specific property. A home inspection is generally not needed to qualify for coverage, although the homeowner may be asked to fill out an application that asks about the age and condition of the home and appliances. Rates are all flat fees with service calls subject to a deductible.
  
  

Home Warranty Versus Contractors or DIY

• An annual home warranty policy will cost between $300 to $600, depending upon the company, with a $50 to $100 deductible per service call. Compare that with an electrician, plumbe, or HVAC service charge, plus the cost of parts. Go to www.PayScale.com to find average wages for service providers. If you do it yourself, consider your time, your ability to do the repair properly and the cost of materials. Of course, the age and condition of the house play a large role in the frequency of repairs.
  
  

Advantages of a Home Warranty

• Covered items normally include mechanical systems (furnace, air conditioning), duct-work, electrical, plumbing (toilets, sinks, disposals, tubs and hot water heater) and basic appliances (washer, dryer, refrigerator, oven/stove and microwave). For the cost of the service charge the problem is fixed. In the case of a furnace, hot water heater and large appliances, however, the replacement value is prorated based on age. Many consumers find it easier to call the home warranty company and have it arrange for a contractor than to have to make multiple calls to contractors. The home warranty could pay for itself with one repair job.
  
  

Disadvantages of a Home Warranty

• Preventive home maintenance may reduce the need for major repairs. The less you use the home warranty, the more expensive it is to you. Companies such a Service Magic will arrange for multiple bids online or by phone. Code violations are normally not covered, but some policies may offer additional coverage for these for an extra fee. Improperly performed repairs or missing components are also not covered.
  
  

Additional Items Coverage

• Expect to pay extra for swimming pools, hot tubs, jetted-tubs and outdoor appliances.
  
  

Home Warranty vs. Home Insurance

• A home warranty is not the same as homeowners' insurance. The warranty covers repairs resulting from structural and equipment problems. Insurance covers repair and replacement resulting from fire, theft or natural disaster.
  
  

Comparing Home Warranty Companies

• Visit www.HomeWarrantyReviews.com to compare cost and features of plans.