A look at home warranties

A home warranty is a contract that guarantees that certain systems in the home are in good working order. If they fail, the warranty company will repair or replace them.

Home warranties can provide added security and peace of mind for all parties involved. Before buying a home warranty be sure that you review the list of all components that are insured. Most programs cover major systems such as heating and cooling, plumbing, electrical as well as built-in appliances and water heaters. Most contracts do not include the roof, foundation or structural components.

Be sure to find out the cost as well as the deductible amount for any repairs. Some programs limit the amount of service calls permitted. There may be a cap on the dollar amount the company will spend on a contract, as well as limiting the replacement cost.

Home warranties are great tools. Their effectiveness depends on a clear understanding of how they work.