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What is a Home Warranty?

A Home Warranty is an insurance contract that covers the repair and replacement costs of home appliances. The warranty generally covers equipment and appliances such as dishwashers, plumbing systems, electrical systems etc. but the coverage varies significantly across warranty companies.

Basic coverage normally includes plumbing, electrical, heating systems and major appliances such as refrigerator, dishwasher, oven. Many companies charge additional coverage for appliances such as washer and dryer, which are generally not covered.

How much does a Home Warranty cost?

They are fairly inexpensive, typically ranging from $250 to $400, depending on coverage. Home warranty companies sometimes run special sales and either discount policy prices or offer additional coverage for the same price. The policies are prepaid for a year in advance, at which time they expire or can be renewed.

How does a Home Warranty work?

Although specific home warranty plans provide for specific types of coverage, most operate the same way.

1. If a home system or appliance breaks or stops working, the home owner calls the home warranty company.
2. The home warranty company calls a provider with which it has a business arrangement.
3. The specific provider calls the home owner to make an appointment.
4. The provider fixes the problem. If an appliance is malfunctioning and cannot be repaired, depending on contract coverage, the home warranty company will pay to replace and install the appliance.