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Home appliance insurance, also called a home appliance warranty plan, covers the cost of repairing and replacing appliances in your home. Unlike most insurance policies, which cover sudden and accidental events, home appliance insurance covers expected wear and tear of appliances. Finding the best policy for you involves understanding whether your appliances are at risk and finding a policy that fits those needs.
What is home appliance insurance?
Home appliance insurance covers the cost to repair or replace devices or systems in your home. Unlike homeowners insurance, home appliance insurance does not protect against specific covered perils, but rather the routine deterioration or breakdown of devices in your home. The appliances covered may differ depending on the policy you select. Here are the items you can expect home appliance insurance to potentially cover.
- Plumbing system, including stoppages
- Clothes washer
- Clothes dryer
- Heating system
- Water heater
- Garbage disposal
- Built-in microwave
- Garage door opener
- Air conditioning
- Electrical system
- Ceiling fan
- Central vacuum
- Sump pump
- Well pump
- Lawn sprinkler
- Septic system
Home appliance insurance is typically offered as a standard package covering specific appliances, with pricier plans covering more items. Sometimes coverage may be split between systems and appliances. Systems are spread throughout your home, such as plumbing. Appliances are standalone items, like refrigerators. Additionally, some appliances or systems may only be included at higher costs, or as add-ons, if they are particularly risky to insure, such as pools or sump pumps.
If you're shopping for home appliance insurance, you should be aware that it can come in different names and forms. For instance, home appliance insurance policies are often referred to as home appliance warranties or home repair insurance. There is also extended warranty insurance, which covers individual appliances rather than several appliances.
What does home appliance insurance cost?
Depending on your insurer and level of coverage, you can expect home appliance insurance to cost anywhere from $400 to $1,000 a year. The National Home Service Contract Association estimates the average cost of a basic contract to be between $400 and $550 per year. Buying a policy that covers more appliances and opting for additional coverage of riskier appliances will increase your premium.
Policies may also have a separate service fee applied each time you seek repairs. For example, if your washing machine breaks down and you ask your home appliance insurer to send a contractor to check the issue, you will pay a fixed service fee regardless of the extent of the damage. Some insurers may give you the option to pay higher service fees for a lower annual premium. For example, if you buy a home appliance insurance policy from American Home Shield, you can choose to pay $75, $100 or $125 per service call. Higher service call fees result in lower monthly policy payments.
What should you consider when buying home appliance insurance?
The best home appliance insurance policy for you covers the appliances you need at an appropriate cost — which may differ for every individual.
You should always research the policies and customer ratings of prospective companies. Here are some tips to keep in mind when shopping for home appliance insurance.
Get a policy that covers your specific home appliances
An appliance insurance policy won't be worthwhile if it covers devices and systems you don't have. Many policies cover a set list of appliances.
Another option is to buy a policy from a warranty company that allows you to customize exactly which types of appliances will be covered.
Know the limits of home appliance policies
Even if your policy covers a certain appliance, its repair or replacement may only be covered up to a certain limit. For example, American Home Shield policies cover appliances such as refrigerators and dishwashers up to $3,000 per malfunction. Always read your policy to ensure you understand how much coverage you're paying for.
Assess the risk of your appliances malfunctioning
If you mostly have newer appliances, you should be less inclined to buy home appliance insurance. Not only will many of your appliances likely still be covered by the manufacturer's warranty, but newer devices are less likely to break down from wear and tear.
However, if you're conservative with your finances and uncomfortable with the risk of unexpected costs, home appliance insurance can replace the uncertainty of appliance breakdown with a fixed insurance payment, even if you live in a new home. On the other hand, if you live in an older home with expired warranties and aging appliances, insurance may be a sensible way to cover their deterioration.
Top home appliance insurance companies
If you're searching for home appliance insurance, you have a variety of options. One place to start is the National Home Service Contract Association (NHSCA), a nonprofit whose members must adhere to certain guidelines. It provides a useful map of companies available in your state.
Here are some well-known home appliance insurance companies:
American Home Shield
American Home Shield (AHS) offers an appliances plan for $70 a month, a systems plan for the same price or a combo plan for $80 per month. The latter includes all of the 21 appliances that the appliances and systems plans cover. If none of these policies fit your needs, AHS also lets you build your own policy, with prices starting at $75 per month and varying based on the number of appliances selected. Add-on coverage is available for specialty items, such as pools, spas and well pumps, at an additional cost. If you select the combo policy, the extensiveness of AHS coverage is difficult to beat, with 21 types of appliances or systems covered.
Select Home Warranty
Select Home Warranty has lower prices but less extensive coverage than American Home Shield. Its most expensive platinum policy costs $42 per month, but coverage excludes some appliances you may find from other insurers, such as doorbells and smoke detectors. It also has optional add-ons, such as pool and sump pump coverage. If you're looking for a pared-down, cheaper policy, you can select the bronze plan, which is $36 per month but excludes some major appliances and systems, such as water heaters and plumbing.
Choice Home Warranty
Choice Home Warranty’s most comprehensive package costs $45 a month, but it covers fewer appliances than AHS. If you opt for a more basic plan, which excludes key appliances like clothes washers and dryers, premiums drop as low as $40 per month before potential discounts.
Given the varying coverage of these plans, we recommend you shop around for a policy that best fits your combination of appliances and personal risk tolerance.