A home warranty is a policy that covers the homeowner for items that are not covered under a typical homeowner's insurance policy. Some of the items that may be covered under a home warranty are heating and air conditioning, roofing leaks, electrical and plumbing problems. Some home warranties also cover repairs on major appliances, such as the washer, hot water tank or refrigerator.

Home warranties are paid for with an annual premium, then, when you file a claim, you will pay a predetermined service charge. This will cover the cost of the repair. Many people like home warranties because they know that they will not have unexpected repair expenses, and it makes it easier to prepare a budget.

Not all home warranties are created equally. When shopping for home warranty coverage there are five things that you should consider before choosing a company.

• The experience of the warranty company. A home warranty company will not stay in business long if their service is poor, their prices too high or they do not deliver on their promises. When choosing a home warranty company, pick one that has been in business more than a few years. New companies may try to lure customers in with low prices, but the savings will not be worthwhile if the company is not in business when you are ready to make a plain.
  
  
• Whether the warranty is transferable. The home warranty should go with the house. Studies have shown that homes that have homeowner warranties sell more quickly than the equivalent home without a warranty. When choosing a company, ask if the warranty will transfer should you sell your home in the future.
  
  
• What type of coverage is provided? When you call the number provided by the warranty company, you should reach a live person, 24 hours a day, 7 days a week. In addition, they should be ready to schedule your repair visit right away. If you have to leave messages and wait for call backs, and then wait days, or weeks, for a service call, all you are saving is money, and time and convenience are part of the benefit of a homeowner warranty.

• What limits are included with the policy. It is important that you read your policy carefully. What sounds like a good deal when you sign can quickly become not much of a deal if your policy excludes parts of the home from coverage. Also, ask what may cause a claim to be denied. Some common reasons that a claim may be denied are improper maintenance, excessive wear or improper installation. Some home warranty companies also depreciate the value of your home's contents, which means that they will pay less as the odds of needing a repair increase. While you may have to settle for some limits and exclusions, it is important that they are spelled out up front.

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