Buying a new home means buying a lot of new appliances too. When people buy new appliances, they ignore the costs of repairs completely. However, even newly-bought appliances and home systems may fail to meet expectations. They could malfunction at the most inconvenient times, or they could break down completely making the purchase a waste of money. Moreover, whether you are living in an old house or a new one, faulty appliances and systems can cause serious inconvenience.

This need for protection from high repair costs leads to the need for having a warranty. When it comes to warranty, two major options can do the job. These two options are home warranty and appliance warranty. There is a major debate about which one is the better option between home warranty vs. appliance warranty. Here is everything you need to know to make a good decision:

What is a home warranty?

In a comparison between home warranty vs. appliance warranty, a home warranty is simply an annual service contract that secures home systems and appliances. For example, if you have a water leak in your dishwasher, it needs to be fixed as soon as possible. Paying for the repairs or the replacement out of your pocket is usually a huge expense. On the other hand, if you have bought a home warranty that provides coverage for damages to the dishwasher, the policy will pay for the repair or replacement. Typically, the home systems that home warranties cover include plumbing, heating, and air conditioning. Appliances that they cover can include the washer, dryer, oven, or dishwasher.

What is an appliance warranty?

An appliance warranty is very similar to a manufacturer’s warranty. However, a major point of difference is that an appliance warranty is not purchased from the manufacturer but a different company. Appliance warranties typically provide coverage for repairs and replacements after the manufacturer’s warranty has expired. These warranties either cover the repairs partially or completely if an appliance breaks down. Moreover, they can save you a lot of time that you would otherwise spend searching for a decent mechanic. The price of an appliance warranty is usually around 15% of the total purchase price of the appliance. Appliance warranties are also known as appliance repair plans, service contracts, home maintenance plans, appliance protection plans, home maintenance plans or appliance repair plans.

You can either buy an appliance warranty at the time of buying an appliance or you can wait for a year. Appliance warranties generally involve small costs such as deductibles.

What do they cover?

Home warranty

Even after gaining thorough knowledge about both products, the question remains on deciding the better between home warranty vs. appliance warranty. A home warranty usually provides coverage to most major systems in the house. These systems are the standard items that have to be present in any newly-built home. Hence, when buying a home you should check for the presence and condition of all these systems. Here are the systems that home warranty covers:

• Electrical
• Ceiling fans
• Air conditioning (including ductwork)
• Doorbell
• Central vacuum
• Toilets
• Plumbing
• Water heater
• Garbage disposal
• Heating (including ductwork)
• Smoke detectors
• Range/oven/cooktop/hood

Appliance warranty

An appliance warranty is offered by the same companies that provide home warranties. These companies include The Home Service Club®, Total Home Protection, and Amazon Home Warranty among many others. These appliance warranties usually cover the additional appliances in your house. These are the items that most people buy after settling into the house. Some home warranties cover these extra appliances if they were purchased with the house. Otherwise, appliance warranties are responsible for covering these items:

• Dishwasher
• Refrigerator
• Microwave
• Clothes washer
• Clothes dryer
• Trash compactor
• Garage door openers

Reasons to get a home warranty or appliance warranty

While discussing home warranty vs. appliance warranty, it is hard to disagree that both are beneficial products worth paying for . This is especially true if you live on a tight budget and lack enough disposable cash. In such a case, any sudden repair or replacement costs on appliances can spring up like a bad surprise. No matter how well you maintain your house and your appliances, they do not last forever. Sooner or later, they will need repairs or replacement. Moreover, the costs to repair or replace these appliances could rise by an average of 10% to 20% annually. Either type of warranty will save hundreds of dollars that you may otherwise spend on typical and possibly trivial repair jobs.

Reasons to not get a home warranty or an appliance warranty

Warranty companies create contracts to protect both you and them. The best way that they can go about that is by modifying the contract itself. They include some clauses along with some exclusions that might benefit them more than you. These clauses and exclusions are essentially conditions that they might cover in case of a system or appliance malfunction. Another thing to consider is that the benefit of home or appliance warranties can only be experienced if the appliance malfunctions or breaks down during the warranty period. This warranty period is usually two to three years of ownership of the appliance. If the warranty period passes without any problem with the appliance, the price of the warranty is nothing but a waste of money.

Additionally, the average repair costs of these appliances are not higher than the price of the warranty by a large margin. Hence, the better option would be to use a savings account to store the money that you would otherwise spend on warranty premiums. The next thing to do would be to let the money sit in the account and only withdraw in case of an appliance malfunction.