The hidden costs of maintaining a home often surprise owners, and one that is sometimes overlooked but important to consider is the price of upkeep and replacement for your home’s appliances and systems. Homeowners insurance is designed to cover the replacement of items only in the case of natural disaster or theft. But what about the costs of maintaining expensive systems and appliances or, even worse, the replacement costs that come with normal wear and tear?
To be sure you have the coverage you need, it’s worth considering home appliance insurance, also known as a home warranty plan. But before we discuss plans, it’s important to distinguish home warranty from the individual warranties offered on appliances. When you purchase an appliance, you receive a manufacturer’s warranty that usually lasts from a few months to a year.
You can, of course, purchase extended warranties. These, however, must be purchased before the original warranty ends. What that means is you’re effectively covering the first 3–5 years of an appliance’s life. A Consumer Reports evaluation offered that “only a small percentage of appliances need repair within the first five years.” Extended warranties then cover the least likely time of repair/replacement needs.
Home appliance policies, on the other hand, can be purchased at any time and cover most appliances and systems within your home, both for repair and replacement. Here’s how they work. The policyholder pays an annual fee, which is an average of $400-$550 (in 2022) according to the National Home Service Contract Association. Costs can go as high as $1,000 for additional coverages. Typical coverages include appliances, such as washer/dryer, refrigerators, ovens, and dishwashers, and systems, such as heating/air, electrical, water heater, and even pool systems. Under the policy, a homeowner makes a claim, and, if approved, a licensed technician is sent to assess the need for repair or replacement. There is a fee for each visit (usually $50-$60) and some companies offer lower annual fees for an increase in the per visit fee.
Assess, Assess, Assess
If you’re considering whether to purchaser a home appliance insurance policy, you should begin by taking stock of your home: How many appliances/systems do you have that might need repair or replacement? How old are they? What is their typical lifespan? What is the typical cost of replacement?
Next, you should assess the policy options of the plans you are considering. It is important to know exactly what appliances and systems the policy covers and what the extra costs are to cover additional items. You should also be clear about service charges for repair visits. Finally, you should check customer reviews of service companies employed by the insurer, as you have to use the company of their choice.
Finally, weigh the pros and cons to decide whether a home appliance policy is right for you. Some things you might consider as you make your decision are:
Pros of a Home Appliance Policy
- With older appliances in the home, you can get a new appliance should it break down and is irreparable.
- All your appliances and systems can be covered under the cost of one policy (with potential exclusions in some cases).
- In cases where you are unsure of the age of an item, you can be sure you have coverage beyond the manufacturer’s warranty.
- You cover costs not covered by your home insurance.
- You can decide on levels of protection based on your finances.
Cons of a Home Appliance Policy
- You can’t choose the service provider, so be sure to check reviews.
- Service providers are much more likely to repair than replace.
- There may be items excluded from the policy that will cost extra to cover.
- Companies can deem a repair/replacement uncoverable if they show a preexisting problem.
- There are often waiting periods before coverage begins, which may leave you uncovered.
Note: A and H Insurance does not currently offer home warranties or home appliance policies. We do offer homeowners insurance that may replace appliances if they’re damaged by a covered peril (fire, theft, water damage, etc.). Check your homeowners policy to verify what perils are covered.
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Ivan Young is a writer in partnership with outdoor kitchen cabinet retailer, Werever.
