Your Options For An Appliance Extended Warranty
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If you have purchased any kind of appliance in the last few years, you were probably offered some sort of extended warranty before you even paid for the appliance. You may also receive phone calls or mail urging you to buy an extended warranty before the manufacturer’s warranty expires on your new dishwasher, dryer, or oven. But is buying individual appliance warranties the best way to cover repairs if the appliance breaks down?
After thoroughly researching the subject, we think that a better option is a home warranty that covers major appliances as well as the important systems in your home. Read on to find out what an appliance warranty is, what it covers, and what you should know before signing up for a plan.
We recommend a home warranty from American Home Shield as a more comprehensive way to protect yourself from the unexpected expense of an appliance breakdown. This home warranty will cover major appliances and systems in your home at a reasonable price that’s lower than the cost of multiple extended appliance warranties.
American Home Shield
What Is An Appliance Warranty?
An appliance warranty, sometimes called an extended warranty or appliance insurance, is a service contract that covers the repair or replacement of a specific appliance for a set period of time. These should not be confused with a manufacturer’s warranty, which covers the product for a limited time after your purchase it and is included in the price of the appliance. An appliance warranty, on the other hand, is an entirely optional purchase.
When the manufacturer’s warranty is in effect, the manufacturer will cover any mechanical breakdowns caused by defects in the manufacturing process. The warranty doesn’t cover issues caused by wear and tear to the appliance. The coverage is usually explained in the owner’s manual, so it’s a good idea to keep the manual handy. Store the original purchase receipt with the manual, in case you need it to prove when you purchased the item to show that the warranty coverage is still in effect.
A home appliance warranty usually covers repairs after the manufacturer’s warranty has expired. The home appliance warranty usually is offered by an independent company, not the manufacturer. With an appliance warranty, you call the company you have the service contract with if the appliance breaks. Depending on the size of the item, you may have to mail the item to a repair center or the company will send a certified repair person. The contract will cover all or part of the cost of the repair, as long as the breakdown is covered by what’s specified in the contract.
What Does An Extended Warranty Cover?
Because an appliance warranty covers a specific appliance, what it covers can vary widely. That’s no surprise, as a washing machine has very different parts than a refrigerator. However, it’s important to read the contract before you sign it, so you have a clear understanding of what’s covered or excluded.
You might find that the contract doesn’t cover accidental damage, for instance. If your appliance needs routine maintenance, that’s probably not covered, and the service plan might specify that you must perform the suggested routine maintenance or you’ll void the contract. Many service plans include a long list of specific parts that aren’t covered, and these are often the items that are most likely to experience a failure.
The cost of plans varies, too. The cost of a 3-year extended warranty on a dishwasher is about $160, for instance. But the appliance warranty may charge other fees as well, such as a deductible or service fee to have a repair technician examine your appliance.
Does Homeowners Insurance Cover Appliances?
Some consumers, especially those who only recently purchased their first home, might think that homeowner’s insurance covers their appliances. Generally, homeowner’s insurance only accepts a claim when your home has been hit by a listed catastrophe, or “peril,” in insurance lingo. That means something like a fire or a lightning strike. It won’t cover the broken ice maker on your refrigerator or other failures that result from normal wear and tear. “Those circumstances aren’t usually included in covered perils in standard [homeowner’s insurance] policies,” according to Jeanne Salvatore of the Insurance Information Institute.
- If there’s a fire in your home, the dwelling insurance part of your homeowner’s policy may cover damaged appliances such as the furnace. Personal property insurance, which is usually part of the homeowner’s policy, might cover the refrigerator or stove damaged in a house fire.
- If there’s a lightning strike that causes a power surge, you may be able to make a claim for appliances that were damaged, whether it was a water heater or a washing machine.
As with any insurance claim you make, you will have to cover the deductible listed on your policy before the insurance company pays any money for the claim. The homeowner’s policy may also place limits on the amount it will pay out for a covered loss.
The Home Warranty Option
As evidenced by the $160 dishwasher extended warranty, purchasing individual extended warranties for all the major appliances in your house can add up quickly. And if the warranty coverage is spread among several companies, imagine the headache it would be to keep track of which policy is with which company and the associated rules for submitting a claim.
But there is a better option than individual extended warranties for every appliance in your home. A home warranty is a simple way to protect yourself from huge bills to repair or replace home systems or major appliances.
Like an extended warranty, a home warranty is a service contract that covers repair or replacement of specific systems and appliances in your home. A home warranty covers breakdowns that result from the normal wear and tear that all appliances undergo, and most policies cover appliances of any age.
Most home warranty companies offer at least two levels of plans, so you can get comprehensive coverage that meets your needs. Many have the option of adding less common appliances, such as central vacuums, to the policy for an additional fee.
What Does A Home Warranty Cover?
The specifics vary by company, of course, but generally the base level policy will cover essential items including:
- Electrical system
- Plumbing system
- Heating system
- Air conditioning system
- Water heater
Other appliances and systems that may be included in a base policy, upgraded policy, or as an add-on option (depending upon the company your warranty is with) might include
- Clothes washer
- Clothes dryer
- Garbage disposal
- Garage door openers
- Sump pump
- Built-in trash compactor
- Jetted tub
- Central vacuum system
Limits And Exclusions
As with all warranties, a home warranty does have some limits and exclusions. For example, the warranty will cover the repair and replacement of parts or components that fail due to normal wear and tear. There may be a dollar limit to what the company will cover for a specific appliance, and these vary by company.
Always read the contract before signing so you understand the limits and exclusion.
How Does A Home Warranty Work?
A home warranty is a service contract. When an appliance that’s covered by your home warranty breaks down, the claim process goes like this:
- You call the warranty company to make a claim. Many companies have a 24/7 service center or allow you to file the claim online.
- The warranty company will select a qualified repair technician from a list of pre-vetted professionals the company partners with. The technician will make an appointment and come to your house to make the repair. You will have to pay a service fee to the technician. The service fee varies by company, but generally averages in the $75 to $125 range.
- The technician will make the repair on the first visit, if possible. In some cases, parts will have to be ordered, and the technician may have to return later with the parts.
- If the technician decides the appliance can’t be repaired, the company will replace it with a comparable model, or reimburse you so you can purchase a new appliance. There may be a limit on the amount the company will pay to replace the item.
What Does A Home Warranty Cost?
The price you pay for a home warranty will vary based on a number of factors. These include
- The warranty company you purchase the policy from.
- The level of coverage you choose. More comprehensive coverage costs more.
- Your geographic location. For instance, in areas with a high cost of living the premium might be higher because the costs of repairing appliances are higher.
- Your service fee. Some warranty companies offer a discounted annual rate if you agree to pay a higher service fee for each claim. In this case, the service fee has a similar function to an insurance deductible.
- Your payment schedule. You might get a discount if you pay your premium in a lump sum for the year rather than making monthly payments. There may also be a discount if you pay for multiple years upfront.
The Cost Of Repairing Appliances
How does the cost of a home warranty compare with the cost of repairing a broken appliance? Here are the average costs to repair and replace some appliances that are commonly covered by a home warranty:
- Water heater: $546 (repair) v. $1,065 (replace)
- Refrigerator: $310 (repair) v. $1,925 (replace)
- Oven/cooktop/range: $150 (repair) v. $1,675 (replace)
- Clothes dryer: $250 (repair) v. $1,075 (replace)
Home warranty coverage will help you pay the cost of repairing or replacing these items. A single repair for your water heater would probably mean you’ve “got your money back” – the value of the repair service alone is probably more than the annual premium. The same if you needed service to your oven in May and your clothes dryer a few months later.
But home warranty coverage also buys you the peace of mind of knowing that if your 20-year-old water heater finally heats its last drop of water, you and your credit card won’t have to come up with the $1,000 or more you’ll need to replace the appliance. Even if the policy has a limit on how much you’ll receive, the amount will certainly cushion the blow of unexpectedly having to spend $1,000 on a necessary major appliance.
Our Pick For Appliance Extended Warranty Coverage
In our research, we found one company that offers extensive warranty coverage for major appliances and comprehensive coverage for the appliances and systems in a home. American Home Shield is an excellent option for a homeowner who wants to combine appliance extended warranties with the peace of mind of a total home warranty.
Best for Appliance Coverage: American Home Shield
American Home Shield gives consumers the option of covering their appliances, their home systems, or a combo package that includes all the appliances and systems of the separate packages.
American Home Shield
Below is a brief outline of the company’s plan options:
- The Systems Plan covers: air conditioning, heating, electrical, plumbing, water heaters, garbage disposal, instant hot/cold water dispensers, doorbells, smoke detectors, ceiling fans, and central vacuums.
- The Appliances Plan covers: refrigerators, clothes washers, clothes dryers, ranges/ovens/cooktops, dishwashers, built-in microwave ovens, trash compactors, garage door openers, free-standing ice makers, built-in food centers.
- The Combo Plan covers: everything in both the Systems Plan and Appliances Plan.
One of the best features about the American Home Shield policy is the generous limits it has for repairing or replacing covered appliances. It allows up to $3,000 for replacements, which is among the highest limit we have seen. The company’s sample contract also indicates that all components are covered in a variety of appliances, such as dishwashers, ranges, clothes dryers, and refrigerators (except for multi-media centers). Many other home warranty contracts include a long list of exclusions for appliance repairs, including the refrigerator.
The cost for an American Home Shield warranty varies based on the plan you choose and your location. The monthly charge ranges from $20 to $65. The company gives customers the option of a higher service fee for a lower annual premium. Service fees range from $75 to $125.
Frequently Asked Questions
A home warranty involves a legal contract, so it’s important to read it and understand it before you sign. As a smart consumer, you should find out the answers to the following questions before you decide on a home warranty service plan.
Q: How much does the warranty cost?
A: Understand that the total cost includes the monthly or annual premium and the service fees required when you file a claim.
Q: Are my appliances already protected?
A: If you have recently purchased an appliance, the manufacturer’s warranty may still be in place. Find that document and determine if it’s still in effect. A home warranty generally won’t cover an item that’s under the manufacturer’s warranty.
Q: Do I understand what the warranty covers and doesn’t cover?
A: It should all be spelled out in the contract. Granted, they aren’t very riveting reads, but spend some time with the document to be sure you know what’s covered and excluded.
Q: Does the plan repair or replace broken items?
A: Find out who makes the decision on when to replace an item rather than fix it, even if the item has required repeated visits from a technician.
Q: What sort of limits does the plan have?
A: See what dollar-amount limits the plan has on repairing or replacing any individual items. Also check the contract to see if there are limits to how many claims you can file in a year.