You have home appliances and systems that you depend on a daily basis. And if those appliances break down, you may face a huge bill to get them repaired or replaced in a timely fashion.

That’s where a home warranty comes in. It covers expenses incurred due to repair or replacement services for your home appliances and the systems inside of your home, helping you to avoid the often-extravagant costs of appliance repair. If your appliance cannot be repaired, the home warranty will provide you with the money you’ll need to replace it.

These contracts can be purchased from warranty providers and are generally considered to be your best defense against appliance breakdown. A home warranty is sometimes referred to as an appliance warranty, home warranty insurance, or a home service contract.

It’s important to note that home warranties are different than homeowner’s or builder’s insurance. Homeowner’s insurance is used to protect your home and its contents from crimes, hazards, and other perils. Builder’s insurance protects the actual structural components of your home. Home warranties, on the other hand, cover the basic wear and tear of your home’s systems and appliances as they age. Home warranties also differ from the extended warranties that you may purchase for individual appliances in that they cover all (or most) of the appliances in your home.

If you have appliances or systems in your home that are over four years old, it’s likely that they’ve suffered significant wear and tear due to extensive use. That means that, by purchasing a home warranty, you’ll save yourself a lot of money and stress when those appliances eventually need to be repaired. Home warranties are also a great investment for first time homeowners who may not know much about home maintenance and will likely need to rely on someone else to make basic repairs to those appliances and systems.

If the appliances and systems in your home are brand new, however, it’s possible that a home warranty is not the right investment for you. That’s why we suggest that you have a qualified and experienced home inspector take a look at your home and its contents. They’ll be able to tell you whether or not a home warranty is in your best interest.

There are a lot of benefits to having a home warranty plan. Here are just a few:

If your appliance breaks down, you won’t have to waste time searching for a trusted contractor
You’ll get service from trusted, qualified professionals
You won’t have to endure unexpected, budget-breaking repair fees
Appliances that cannot be repaired will be replaced
A home warranty contract increases the value of your home at the time of sale

Costs of home warranty plans often vary based on what you own and what needs to be covered, but most annual premiums usually fall between $300 and $600. You’ll also have to pay a service fee every time you report a claim, and that usually falls between $50 and $100. Again, these costs will vary depending on how big your home is, how old it is, and where it’s located.