If you've purchased a home or are on the market for one, someone will mention the need for a home warranty policy. The big questions though are what they cover and whether or actually not you need one.
A home warranty is essentially an insurance policy that covers your home. This policy is not to be confused with homeowners insurance, which covers damages or losses to your entire home or possessions (think fire, flood, and the like).
Home warranties can cost hundreds of dollars annually and often must be paid in full. Some companies offer payment plans to spread out the expense for a new homeowner.
In addition to premiums, there is a fee for a the home warranty inspections that customers must pay after filing a claim. This fee ranges from sixty to a hundred dollars per person that comes to the home to perform an inspection.
A plan purchased when you first buy a new home can be beneficial because it can provide a buffer to fixing common problems that may arise, especially in that first year when you're adjusting to new appliances and a new environment.
First, most warranties are strict in what they cover. If a warranty doesn't cover the problem that needs fixing or doesn't cover the total cost, then you are also paying out of pocket for someone else to resolve the issue on top of the premium.