How Home Repair Insurance Plans Work
There are three kinds of home warranty plans that a home repair insurance company might offer. An appliances plan covers basic home appliances, like your refrigerator, oven, garage door openers, and clothes washer and dryer. A systems plan covers major systems in your home, like the electrical system and the heating system. A combo plan is a comprehensive coverage plan that protects both systems and appliances. In addition, some home warranty companies also offer additional coverage for things like swimming pools, septic systems, well pumps, and roof leaks.
Do you need home repair insurance? To figure it out, take an inventory of all your major appliances and systems and how old they are. Then, compare the ages of the most expensive items and systems to their average life expectancies. If a lot of your appliances and systems are getting close to the end of their expected life, signing up for a home warranty could save you a lot of money—as long as you’ve kept maintenance records for all those systems and appliances.
Maintenance records are important because most companies require customers to perform routine maintenance to keep systems eligible for repairs and replacement. Otherwise, your coverage for those systems will be void. That might be an easy task for new homeowners who have just purchased these appliances, but if you’ve just bought an older home, you may not have adequate records or proof that the previous homeowners did the routine maintenance they were supposed to do.
Buying a home? Homebuyers should ask the previous homeowners to provide a record of maintenance and home improvements and the manuals for all the major appliances. If they can’t do that, don’t buy home repair insurance, because you likely won’t qualify for repairs or replacements. If they can provide records, review them to make sure routine maintenance was done on the most expensive appliances and systems.