A home warranty plan is a protection plan designed to cover the cost of repairs in the home. Typically, these plans are offered to homeowners at the time they purchase their houses. There are different types of plans that offer varying degrees of coverage. In general, though, the protection plan will pay for repairs done to major appliances or home systems like a house alarm.

The Cost of a Home Warranty Plan

A home warranty plan tends to be inexpensive. It is a prepaid plan that renews on an annual basis and covers a year of service. The cost of an average plan ranges from $250 to $400 depending on the coverage provided. Homeowners can purchase the plans themselves. Sometimes, though, a seller will offer to pay for the plan as an incentive to purchase the home. Real estate agents may also purchase warranty plans for their clients when they close on a home.

The Advantages and Disadvantages of a Home Warranty Plan

A home warranty plan’s primary selling point is peace of mind. Homebuyers may be concerned about replacing appliances that break or making other repairs soon after purchasing the home. The warranty plan provides a way for homeowners to get necessary repairs completed with little to no additional cost to them.

A common complaint by homeowners about home warranty plans is receiving poor customer service from the company that manages the program. Repairs may be done using inferior materials or not completed correctly. Some homeowners have expressed difficulty contacting representatives of the company. Denial of valid claims was also problematic with some warranty companies.

Tips for Buying a Home Warranty Plan

If you choose to purchase a home warranty plan, there are several things you can do to reduce your risk of experiencing problems with claims and other issues.

* Thoroughly investigate the company that will be servicing your plan. Some homeowners have purchased plans only to have the company go out of business. The company should be reputable and be on a firm financial footing.

* Carefully read the policy, so you know what is covered by the plan. It is especially important to understand the factors that may trigger the denial of a claim. Some reasons the warranty company may use to deny a claim include code violations, improper installation, and poor maintenance.

* Coverage varies from plan to plan. Consider your specific needs, and select a plan that addresses them.