Consumer Watch: Should you buy a home warranty?

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Q: I keep hearing friends talk about their home warranty. I don't see why it's a good idea to pay a monthly bill for just-in-case something goes wrong and must be repaired/replaced. Advice? - Harry Homeowner

Dear Mr. Homeowner: Imagine you've just purchased or built your dream home, decorated it to your heart's content, and life is great. A year down the road, that brand-new heater goes out in January, leaving you and the Missus freezing and knowing you'll have to dip into your savings to replace the equipment. Going online, you discover you spent most of the family's left-over savings on that 2018 BMW your wife just had to have (!) and that "savings" won't buy much more than a few tanks of gas.

With a new mortgage payment and a limited amount in savings, you start checking numerous financial options on how to pay for this unexpected expense. Fortunately, you purchased a home protection plan that will cover this expense as well as any major systems and appliances that may need repair or replacement in your home. (Too bad you didn't really buy this protection so no way do you reap all the benefits when something goes wrong.) Please, before another something goes breaks, investigate a home warranty, which includes the following basics: (Obviously, coverage for a boat, pool or additional home "perks" cost more.)

Home warranties typically include coverage the following major appliances and systems:

-central air-conditioning systems

-central heating systems


-interior electrical systems


-ranges, ovens, and cooktops


-built-in microwaves

-water heaters

-plumbing systems

-garbage disposals

-washers and dryers

-garage door openers

-roof leaks

Typically, a home warranty cost a few hundred dollars, and may be paid in a lump sum amount during the purchase of a new home at the time of closing. (Note: home warranties can be purchased on behalf of the new homeowner by others, including the home seller, real estate agent or a family member or friend.) If a home appliance insurance claim is filed, then the homeowner may be responsible for paying a service fee or deductible that typically ranges from $50 to $100. Some warranty companies have different contract agreements; therefore, fee amounts may vary. When buying a home warranty plan yourself, either pay a lump sum for the year or pay monthly.

Filing a claim couldn't be easier. First, check with the company or read your contract to make sure the item is covered. Once verified, the company schedules an appointment for you with a local contractor who comes to your home, identifies the problem and recommends to repair or replace. The service fee is paid directly to the company in most cases, although some still allow payment to the contractor at the initial visit.

The best way to select the right home protection plan for you is by – you guessed it – researching what each company offers with their plans. For instance, if you have a home with older appliances, you may be interested in finding a plan with home appliance insurance. If you're like me and believe the old adage "Better safe than sorry," select the best plan that meets your needs, and sit back and relax with the knowledge you're saving potential big bucks and lots of inconvenience.

Contact Ellen Phillips at