Understanding the Distinction Between Home Warranty and Appliance Protection Plans
Discover the key differences between home warranties and appliance protection plans to choose the best coverage for your household. Learn what each plan covers, their benefits, and considerations to make an informed decision on safeguarding your valuable appliances and systems effectively.
Understanding the Difference Between Home Warranty and Appliance Protection Plans
When purchasing a new home, new appliances often come along. Many buyers overlook the potential costs of repairs, which can be substantial if appliances or systems fail unexpectedly. Whether living in an older property or a new one, malfunctioning appliances and systems cause significant disruption and incur high repair expenses. Protecting your home and its appliances through warranties is essential to avoid unexpected costs and hassles.
To safeguard against costly repairs, homeowners often consider warranties. Two main options are available: home warranties and appliance protection plans. Choosing the right one can be confusing, so here’s a comprehensive guide to help you make an informed decision:
What is a home warranty?
A home warranty is a yearly service contract that covers the repair or replacement of major home systems and appliances. For instance, if your dishwasher develops a leak, a home warranty helps offset repair costs.
Instead of paying out of pocket for repairs, a home warranty policy covers these expenses. Typically, home warranties include systems like plumbing, electrical, heating, and air conditioning, as well as appliances such as washers, dryers, ovens, and dishwashers.
What is an appliance protection plan?
An appliance protection plan functions similarly to a manufacturer's warranty but is purchased separately from a different company. These plans usually kick in after the original manufacturer's warranty expires, covering repairs and replacements for appliances. They can save time by eliminating the need to find service providers independently. Generally, an appliance protection plan costs around 15% of the appliance's purchase price and can be bought at the time of purchase or later.
These plans often involve deductible payments and can cover appliances such as dishwashers, refrigerators, microwaves, washers, dryers, and garage door openers.
What do they cover?
Home warranty
When comparing options, it’s vital to note that home warranties typically protect major home systems. These include:
- Electrical systems
- Ceiling fans
- HVAC (including ductwork)
- Doorbells
- Central vacuum systems
- Toilets and plumbing
- Water heaters
- Garbage disposals
- Heating systems
- Smoke detectors
- Kitchen appliances such as ovens and cooktops
Appliance protection plan
Provided by several service providers, these plans often cover additional household appliances like:
- Dishwashers
- Refrigerators
- Microwaves
- Clothes washers and dryers
- Trash compactors
- Garage door openers
Why consider a warranty or protection plan?
Both options are valuable investments, especially if you have a limited budget. Unexpected repair costs can be burdensome, and appliances tend to need repairs over time. Warranties reduce the financial impact by covering these expenses, saving hundreds of dollars annually.
Reasons to reconsider warranties
Warranties are contracts designed to benefit providers as well as consumers. They often include clauses and exclusions that limit coverage. Additionally, warranties are most effective if appliances malfunction within the coverage period, usually two to three years. If no issues occur during this time, the warranty may feel like a wasted expense. Moreover, repair costs for common appliances tend to be similar to or less than warranty premiums, making savings possible by establishing a dedicated savings account instead.
