How to Find The Best Home Appliance Insurance Policy

How to Find The Best Home Appliance Insurance Policy

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Home appliance insurance, also called a home appliance warranty plan, refers to a policy that covers the cost of repairing and maintaining appliances in your household. Unlike most insurance policies, which tend to cover sudden and unexpected events, home appliance insurance covers you for the expected wear and tear of key parts of your home. These policies can provide broad coverage, and finding the best one 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 is a policy that covers the cost to repair and replace devices or systems from your home. Unlike homeowners insurance, home appliance insurance does not protect you from specific covered perils, but rather the routine deterioration or breakdown of devices in your home. The appliances covered will differ depending on the policy you select, but we've listed below the types of items you can expect home appliance insurance to potentially cover.

  • Plumbing system, including stoppages
  • Clothes washer
  • Clothes dryer
  • Heating system
  • Water heater
  • Garbage disposal
  • Refrigerator
  • Oven
  • Built-in microwave
  • Cooktop
  • Dishwasher
  • Ductwork
  • Garage door opener
  • Air conditioning
  • Electrical system
  • Ceiling fan
  • Pool
  • Central vacuum
  • Sump pump
  • Well pump
  • Lawn sprinkler
  • Septic system
  • Spa

Home appliance insurance coverage will generally be offered as part of a standard package covering specific appliances, with higher priced plans covering more items. Sometimes coverage may be split between systems and appliances—systems meaning things that may be spread throughout your home, such as plumbing, and appliances referring to standalone items, like refrigerators. Additionally, some appliances or systems may only be included at higher costs, also known 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 are also policies called extended warranty insurance, which in contrast offer coverage for individual appliances rather than a group of different 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, with the National Home Service Contract Association estimating 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 premiums.

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 fixed service fee regardless of the ultimate 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 the provider American Home Shield, you can choose to pay $75, $100 or $125 per service call, with higher service call payments resulting in lower monthly payments on your policy.

What should you consider when buying home appliance insurance?

When you're shopping for a home appliance insurance policies, the best policy for you will be one that covers the appliances you need at an appropriate cost, and that may differ for every individual. At a minimum, you should always research the policies and customer ratings of prospective companies, but here are some tips to keep in mind when shopping for home appliance insurance.

Get a policy that covers your specific home appliances, or the closest thing to it

An appliance insurance policy won't be worth it if it's covering devices and systems you don't have. Many policies come in predetermined packages that cover a set list of appliances. For example, if you don't have a clothes washer and dryer, covered in most standard home appliance insurance policies, you'll be paying to protect something you don't have. If you live in a home or apartment with limited appliances, you may find better value looking into warranty plans for individual devices rather than a comprehensive policy. Another route may be 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 an appliance is covered under your policy, its diagnosis and 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 covered-item 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 live in a newer home with newly purchased 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 is a way to replace the uncertainty of appliance breakdown with a fixed insurance payment, even if you are in a new home. On the other hand, if you're living in an older home with expired warranties and aging appliances, insurance may be a sensible way to cover the heightened risk of issues related to their deterioration.

Examples of Top Home Appliance Insurance Companies

If you're searching for home appliance insurance, you'll have a variety of options. One place you could start is the website for the National Home Service Contract Association (NHSCA), a nonprofit whose members must adhere to NHSCA guidelines, and it provides a useful map of companies available in your state. Some well-known appliance warranty companies are summarized below to help you start your search.

American Home Shield

American Home Shield (AHS) is one of the better-known home appliance insurance providers. Coverage options include an appliances plan for $70 a month, a systems plan for the same price or a combo plan for $80 per month that includes all of the 21 appliances from those two policies. If none of these policies fit your needs, AHS also has an option to 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 standard.

Select Home Warranty

Select Home Warranty does not have as extensive coverage as American Home Shield, but in return you'll pay a lower price. Its most expensive platinum policy comes out to $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 priced at $36 per month but excludes some major appliances and systems, such as your water heater and plumbing.

Choice Home Warranty

Choice Home Warranty offers a package similar to Select, with its most comprehensive package priced at $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.

Ultimately, given the varying coverage of these products, we recommend you shop around for a policy that best fits your combination of appliances and personal risk tolerance. Many home appliance insurance companies provide the option of obtaining a quote online, making the shopping process simpler than other types of insurance policies.

Mark is a Senior Research Analyst for ValuePenguin focusing on the insurance industry, primarily auto insurance. He previously worked in financial risk management at State Street Corporation.

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