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What is a ‘home warranty’?

A home warranty is a service contract that’s intended to save you the cost of repairing appliances and systems in your home like air conditioning and heat. It’s usually a one-year deal, and often turns up when you buy a home that’s a little older. 

Here’s how a home warranty works: First, you pay between $250 and $500 or so for a year of coverage, plus you pay a service fee of $25 to $75 every time a tech visits your house after you make a claim.

If an appliance or a home system breaks down or acts up, you call the home warranty company, which contacts a local provider to swing by and check it out. The provider repairs the appliance. If it just can’t be fixed, the home warranty company usually will replace it.

Once you move into a home with a warranty, you’ll probably have the chance to renew the plan after it expires. Don’t bother.

While some homeowners, especially first-timers who are just learning how to maintain their homes on their own,find a home warranty a convenient way to get things fixed, others complain that the plans don’t cover enough and that too many claims are denied. 

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