Finding the best home warranty can be difficult with so many companies and plans to consider. When you’re ready to buy a home warranty, be sure to research companies that offer:

• Online quote. Most home warranty companies will send out a quote once you provide basic information, such as your name, email address, and zip code. If you prefer not to disclose your details, you can call the company’s customer service number to request a quote over the phone.
• A variety of diets. Make sure the plan covers the devices and systems you want and confirm it’s offered in your postcode.
• Reasonable costs. You’ll pay a monthly or annual fee for the policy, plus a service fee each time the company sends a service technician. Compare the cost of the policy with the service charge. For example, if you expect a lot of repairs, you might get away with a more expensive policy that offers lower service charges.
• Reasonable Policy Limits. Some home warranty companies look cheap on paper, but that may not matter if the coverage limits are very low. Reputable home warranty companies usually cover at least $2,000 per item per year.
• Easy claims process. In the event of a problem, it should be quick and easy to submit a service request, by phone or online.

Most people are very familiar with home insurance, which protects against accidental damage to your home and belongings in the event of theft, fire, storms and natural disasters. A home warranty also covers your home, but it works differently.

A home warranty is a service contract that helps pay for repairs and replacements of covered appliances and major home systems. In exchange for a monthly or annual fee, you pay a fixed service fee each time a device or system fails.

Generally, you don’t need a home inspection or maintenance records to purchase coverage. And it doesn’t matter whether your house is new or over 50 years old.

After choosing a plan, service fees, and any additional coverage, you pay upfront for the entire year or set up monthly payments. Most companies have a 15-30 day waiting period after purchasing the plan before coverage takes effect.

Once this waiting period is over, you are free to start using the home warranty. If you purchased or received home warranty as part of a home purchase, your coverage usually begins when you close in your new home.

Although the specifics depend on the company, here is a general overview of how a home warranty works:

1. If a covered device or system fails, you file a claim with your home warranty company online or by phone. Most companies have 24/7/365 customer service representatives ready to help you.
2. Your home warranty company selects a service provider.
3. The service provider contacts you to set up an appointment.
4. The technician comes to your home to diagnose the problem. If covered, the technician repairs or replaces the item.
5. You pay the service fee to your home warranty company or directly to the technician (depending on your plan). The home warranty company covers the rest.

A home warranty coverages eligible appliances and systems in new and existing homes. Many home warranty companies offer three types of plans, including:

• Appliance plans (for example, washer/dryer, dishwasher, and refrigerator)
• System plans (e.g. air conditioning, heating, plumbing and electrical)
• Combo plans that cover everything included in the device and systems plans

Most companies offer optional add-on coverage for specific items not covered by the appliance or system plan. Additions include pools, hot tubs, lawn sprinkler systems, additional appliances (like a second air conditioner or refrigerator), sinks, and septic systems.

Residential warranties generally exclude anything not explicitly covered by the policy. And even if a device or system is covered, home warranties won’t pay to repair/replace anything your home insurance policy should cover.

Residential warranties also generally exclude cosmetic damage (for example, a dent in your stainless steel refrigerator), structural damage, damage caused by improper installation, pre-existing conditions, damage caused by power surges, or anything that doesn’t. is not considered normal wear and tear (ie misuse or abuse).

The most common complaint against home warranty companies is their refusal to pay for repairs or replacements. Sometimes the denial is valid – an exclusion or “rule” explained in fine print that the customer has ignored. However, some disreputable companies have a reputation for avoiding baseless payments.

Other complaints about the home warranty include slow response times, poor repair work, poor customer service, and vague terms and conditions. Before purchasing a policy, be sure to read the fine print, so you know exactly what is covered and what is not.

There are two costs to consider when comparing home warranty plans: the service fee and the monthly (or annual) cost.

The service fee is the amount you pay each time you request a service. These fees generally range between $55 and $150. You can choose between one, two or three service fees, depending on the company. In general, the lower the service fee, the more expensive the plan. If you need more than one type of technician for the same issue, for example, you need a plumber and an electrician to work on a water heater, you may incur two service charges.

The monthly or annual cost is what you pay to access “discounted” service calls. These costs range from around $350 to over $1,100 per year, depending on the plan, service fees, home size, and where you live.

Whether a home warranty is right for you depends on several factors, including the age of your home, the quality of your appliances, and your own repair skills.

Chad Marzena home warranty expert and associate professor of insurance law in the United States, told Investopedia: “If a person has the funds to insure their appliances themselves, a home warranty may not necessarily be as urgent than the situation you may be in. on a very tight budget and anticipate that a device may be in the last year or two or three of operation.It might be more attractive to the consumer to get a warranty at home for peace of mind. So the question of home guarantees is a question of risk tolerance for big expenses.”

Every home appliance and system eventually breaks down. If you’re a do-it-yourselfer, you may be able to do the repairs yourself and save some money. However, many homeowners lack the skills, tools, time, and patience to do their own repairs. In these situations, a home warranty can make financial sense.

Here’s why: According to the “1% rule,” you should set aside at least one percent of the value of your home each year to cover maintenance and repairs. For example, if your house is worth $200,000, you should budget $2,000 per year for maintenance. Another rule, the “square foot rule,” advises you to budget $1 per square foot. So if your house is 2,000 square feet, you should set aside $2,000 per year.

The annual cost of an in-home warranty could be much lower than these guidelines, even if you use the service several times a year. Say you have a $200,000 home and want to set aside the recommended $2,000 per year for maintenance. Now, suppose you buy a home warranty instead. If the plan costs $500 per year and has a $100 service fee, you could make 15 claims before reaching that $2,000 threshold.

Of course, there’s no way of knowing if you’ll use the $2,000 you’ve set aside, and if not, you can save it for next year. Likewise, you cannot predict whether you will use a home warranty if you purchase one. Still, a home warranty often ends up saving money in the long run. And it can definitely help you budget and give you peace of mind.