On buying a home, you will be offered a home warranty to protect you from unforeseen repair expenses. While this is an excellent financial protection for homeowners, you need to consider a number of factors to choose the best one. To help you, here is a brief overlook of different aspects of home warranties.

What is a home warranty?
Some people confuse a home warranty with homeowners insurance that protects your property from disasters like fires, hail, theft, personal possessions, and certain types of water damage. Whereas a home warranty is an agreement between a homeowner and a company that offers replacement and repair services at discounted rates. A home warranty also covers appliances such as dryers, washers, and refrigerators.

You have to purchase a home warranty while purchasing a home. You can either purchase one yourself or ask the seller to buy one for you.

There is an agreement between home warranty companies and service providers. If something that is covered by a home warranty stops working, the homeowner calls the company. The company will contact the service provider and send a professional to inspect the issue. The professional will assess if the item requires replacement or repair. The homeowner has to pay a small service fee. This fee is in addition to the money spent to buy a home warranty.

Features of home warranties
Here are some common features offered by home warranties.

• Provides immediate assistance: It is best for people who do not have an emergency fund or do not want to worry about finding a contractor for the job. If something that is covered by your home warranty breaks down, all you have to do is call the company, and they will send a professional.
• Protects seller from buyer complaints: A home seller can offer a one-year home warranty with the purchase of a house as a measure to protect themselves from buyer complaints.
• Prevent huge financial expenditures: Home warranties protect buyers from expensive repair costs. This is ideal, especially for those who have exhausted all their savings in buying a new home.

Cost

Home warranties can cost hundreds of dollars per year. The amount can be paid either upfront or in installments. The cost of the plan depends on the type of property – condo, townhouse, duplex, or a single-family home. It also depends on the repairs and services a homeowner chooses in the plan.

Usually, the cost of home warranties ranges between USD 25 to USD 50 per month or USD 400 to USD 600 per year. The standard service fee charged by the professional is between USD 60 to USD 100.

Top home warranty companies
Here is the list of the top three home warranty companies in the industry.

• American Home Shield: This company offers plans ranging between USD 39.99 to USD 58.99 a month. American Home Shield is one of the oldest home warranty companies in the industry that offers the most comprehensive and flexible coverage.
• Choice Home Warranty (CHW): Choice Home Warranty offers two plans that cost between USD 36 to USD 44 per month. In addition, you have to pay USD 85 as a service call fee. CHW is popular because it covers almost everything in its base plan, offering one of the affordable home warranties.
• Select Home Warranty: This company offers the cheapest options among top providers in the industry. Its ‘Platinum Care Plan’ only costs USD 37.50 per month, with a standard USD 75 service fee. Also, this is the only provider on the list that provides roof coverage under their plan at no extra cost.

A home warranty is not a perfect solution to all the risks and unforeseen expenditures homeowners can face. But, it sure protects you from expensive repair costs, especially if you are out of emergency funds. Before buying a home warranty, make sure you read the contract carefully.