A home warranty is basically an insurance policy you invest in to cover aspects of your home that traditional homeowners insurance won't cover. You'll pay an annual premium on your home warranty plan in return for protection against home heating, air conditioning, electrical. and plumbing repairs. For extra premiums some warranties will also cover things such as your washer and dryer, refrigerator, water heater, dishwasher, and other major appliances.
How It Works
As long as you keep up to date on your annual premium, all you have do if you experience a problem is call your warranty's 1-800 number, 7 days a week, 24 hours a day. Your provider will then send out a licensed contractor for a standard fee (usually in the neighborhood of $30-$50) to evaluate your problem and perform the necessary repairs.
Things to Look for When You Shop Around
Not every warranty is equal, so it's important to know what you're looking for as you solicit a provider. When looking for a warranty for your home, here are a few things to keep in mind:
Find Someone with Experience. When it comes to insurance companies of any kind, longevity is a good sign. Look for a company that has been in business for 20 years or more so you know you'll be covered for years to come.
Make Sure Your Warranty Is Transferable. A good warranty should be transferable when you sell your home. This is very important for reasons we'll discuss later on.
Make Sure They're There to Serve You. Your home warranty plan should provide you with 7 day a week, 24 hour service, and their service reps should answer the phone and attend to your problem in 30 seconds or less. Any company that can't live up to these basic customer service standards probably won't live up to other promises either.
Don't Accept Any Provisions. Many warranty companies will try to write outs into their contracts. If your prospective company puts limits on the make, style, age, locale, or number of units they'll cover with your policy, find someone else to give your business to.
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Home Warranty
Other Reasons for Buying in
Peace of mind is far and away the most important reason to invest in a home warranty plan, but it's certainly not the only one. Home sellers report that homes covered under a transferable warranty sell at a rate 50% faster than non-covered homes. Buyers simply feel more confident knowing that any major repairs they might encounter shortly after the purchase will be covered in full.
If you're looking for a little more security when it comes to dealing with the unforeseen home repairs that are part and parcel to home ownership, a home warranty is exactly what you've been looking for. 
Matt Goering, formerly a carpenter and house painter, is a freelance writer for the home improvement industry who has published over 600 articles.
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