Have you experienced the sense of relief when something breaks on your vehicle and you realize it is covered by the warranty? How would you like to have that same feeling when something goes wrong in your home?

Home warranty plans work in much the same way as a vehicle warranty, except this coverage applies to the systems and appliances in the home, such as a water heater, plumbing, refrigerator, dishwasher, clothes washer and dryer, and air conditioning and heating systems. Each warranty company’s plan is different. For most, the homeowner can pick or choose what is covered, or opt to cover everything.

“A warranty is a good idea for homeowners who can’t absorb the cost of a major repair, such as a furnace going out,” Chris Earl from Stephens Real Estate said. “Or for a first time homebuyer who is using all their resources to buy the house and couldn’t afford to replace the furnace. However, if something comes up in the home inspection before closing, that issue will need to be dealt with first. It’s not covered by a warranty. The warranty only covers new problems.”

With a plan, if something that is covered breaks, the homeowner calls the warranty company to request service. The company will call a local contracted service provider to make the repair. The key is to call the warranty company first. Otherwise the repair won’t be covered.

Also, the plan will not cover structural items typically handled by your homeowner’s insurance. For example, the warranty will fix or replace a faulty hot water heater, but it will not cover any water damage from the malfunctioning water heater. Some warranties also do not cover systems that have not been properly maintained, so be sure to read the agreement carefully before signing.

Earl noted, “The warranty companies have a network of service providers that fit their criteria. The homeowner won’t be in control of choosing the service provider or the timing of the repair. Read the fine print of the warranty to know exactly what is covered.”

Home warranties can be purchased by home buyers, but sometimes sellers will get one as an added benefit to buying a house. Homeowners also may purchase plans even when they are not in the process of buying or selling a house. The cost for a warranty plan ranges between $250 and $700 per year, depending on how much is covered. Plus, there is typically a service fee charged each time a repair is made, usually between $50 and $100.