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A home appliance insurance (or warranty) plan covers the cost of repairing or replacing appliances in your home. Most homeowners policies cover sudden and accidental events, but home appliance insurance covers normal wear and tear. Finding the best policy for your needs depends on whether your appliances are at risk.
What is home appliance insurance?
Home appliance insurance covers the cost to repair or replace devices and systems in your home. While homeowners insurance protects against specific hazards, home appliance insurance covers routine deterioration and breakdown. The appliances covered may differ by the policy you select.
Here are the items you can expect a policy 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 usually a standard package that covers 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 stand-alone items, such as refrigerators. Also, some appliances or systems may only be included at higher costs or as add-ons if they're risky to insure, such as pools and sump pumps.
If you're shopping for home appliance insurance, be aware that it can come in different names and forms. For instance, home appliance insurance policies are often referred to as home warranties or home repair insurance. There is also extended warranty insurance, which covers individual appliances rather than a bundle of appliances.
What does home appliance insurance cost?
Depending on your insurance company and level of coverage, you can expect to pay anywhere from $400 to $1,000 a year. The National Home Service Contract Association estimates the average cost of a basic contract to be $400 to $550 per year. Buying a policy that covers more appliances or riskier ones will increase your premium.
You may also have to pay a service fee each time you need a repair. For example, if your washing machine breaks down and you ask your home appliance company to send a contractor to check the issue, you'll pay a fixed service fee, regardless of how much damage.
Some insurance companies may give you the option of paying 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 payments.
What to consider when buying home appliance insurance
The best home appliance insurance policy may be different from one person to the next. The right one for you will cover the appliances you need at an appropriate cost. .
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 appliances
An appliance insurance policy isn't 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 choose which appliances to cover.
Know the limits of home appliance policies
Even if your policy covers an appliance, its repair or replacement may only be covered up to a certain limit. For example, an American Home Shield Gold plan covers appliances such as refrigerators and dishwashers for up to $2,000 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. Many of your appliances are likely still covered by the manufacturer's warranty. And newer devices are less likely to break down from wear and tear.
However, if you're careful with your finances and uncomfortable with the risk of unexpected costs, home appliance insurance can replace the uncertainty of an appliance breakdown with a fixed insurance payment, even if you live in a new home. IOr if you live in an older house with expired warranties and aging appliances, insurance may be a sensible way to cover their deterioration.
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Top home appliance insurance companies
If you're searching for home appliance insurance, you have lots of options. One place to start is the National Home Service Contract Association, a nonprofit whose members adhere to 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 plans for appliances or systems for around $70 a month or a combo of both for $80 per month. Prices vary by location. The combo includes all 23 appliances and systems that the separate plans cover. If none of these policies fits your needs, AHS also lets you build your own policy. Prices start at $75 per month and vary 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 hard to beat, with 23 appliances and systems covered.
Select Home Warranty
Select Home Warranty has lower prices but less extensive coverage than AHS. The platinum policy, their most expensive, costs $42 per month. But that coverage excludes some appliances that other companies may cover, 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 basic, cheaper policy, you can select the bronze plan, which is $36 per month. However, this plan does not cover 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 basic plan, which doesn't cover key appliances like clothes washers and dryers, premiums drop as low as $40 per month before any discounts.
Given the varying coverage of these plans, we recommend shopping around for a policy that best fits your combination of appliances and personal risk tolerance.