What Is Homeowners Appliance Insurance?

Homeowners appliance insurance, often called a home warranty, pays for repairs or replacements when covered appliances and home systems break down from normal wear and tear. Standard homeowners insurance doesn’t address these everyday breakdowns. It’s built for sudden disasters instead. Coverage terms, limitations and exclusions vary by provider and policy.

Appliance insurance covers worn-out water heaters and failing refrigerators. Traditional homeowners insurance steps in for sudden disasters instead. Homeowners weighing property coverage can check MoneyGeek's picks for the best homeowners insurance companies or compare average home insurance costs by state.

Homeowners appliance insurance plans come in three main types:

A home warranty may not cover all types of repairs or replacements because limitations and exclusions usually vary from provider to provider.

Homeowners appliance insurance covers appliances and systems in your home, though specific coverage varies by provider and plan.

Your provider and policy determine coverage. Plans don't include all items listed here. Check your policy terms for what's actually covered.

Some policies also cover extras like burglar and fire alarm systems, ceiling and exhaust fans, central vacuum, doorbells and garage door openers. Sump pumps, lawn sprinklers and septic systems may also be included, depending on the provider.

Not every appliance and system is covered under a standard policy. HVAC systems and water heaters, for example, might require extended coverage at an added cost under an appliance-only plan. Many providers bundle appliance coverage with home systems in a single plan.

Appliance insurance doesn't eliminate repair costs, but it cuts your out-of-pocket expenses by covering most repairs in exchange for a service fee per visit. The service fee is usually well below the actual repair cost. You pay it each time a covered appliance or system breaks down, and the policy covers the rest.

Homeowners appliance insurance covers repair or replacement costs when specific circumstances are met. Key situations where a home warranty applies:

• Mechanical or electrical failures: Breakdowns due to mechanical or electrical failures are usually covered. This includes problems like ruptures or bursts, power surges, short circuits, motor burnouts and pressure system breakdowns.
• Wear and tear: Standard wear and tear is covered by home warranties. For instance, parts that rust may be covered. The extent to which wear and tear is covered varies from provider to provider.
• After the manufacturer's warranty expires: When the manufacturer's warranty on an appliance or system has expired and your appliances break down, your home warranty kicks in.

Homeowners appliance insurance works best for people who want protection from surprise appliance repairs. Lenders don't require it, but it's helpful for:

• Homeowners with aging appliances
• Homeowners on a tight budget
• First-time homebuyers
• Landlords
• Those who lack DIY repair skills

Home appliance insurance isn't required, but it can be worth it if you want to protect your budget from surprise repair bills. Consider your appliances' ages and your financial situation to decide if it makes sense for you.

Whether appliance insurance makes sense depends on your appliances' age, your repair budget and how much financial risk you're willing to absorb. The comparison below shows where coverage saves money and where it falls short.

Unlike homeowners insurance, homeowner's appliance insurance doesn't eliminate the cost of repairing or replacing items. You will have to pay certain fees. Below are the fees you can expect with home warranty.

• Premiums: You'll pay regular premiums for home appliance insurance. Premium costs vary based on your insurer, coverage level, number and age of appliances, and location.
• Service fees: You'll pay a service fee or deductible when you request a repair or replacement for a covered appliance.
• Additional coverage costs: Some providers sell additional coverage for specific appliances or systems not included in their standard plan, increasing your costs. Coverage splits between systems (like plumbing), standalone appliances (like refrigerators) and riskier items like pools or sump pumps.
• Renewal costs: Your renewal costs for home appliance insurance can vary as premium rates change.
• Cancellation fees: Cancellation processes and fees vary by company. You can get a full refund minus a service fee for policies less than 30 days old without any service received. Most companies require written termination notice and provide a prorated premium refund, minus any cancellation fee.

Thoroughly review your home warranty policy to understand the coverage limits, exclusions and terms because these may vary between providers and plans.

Home appliance insurance cuts repair costs, but it won't cover everything. Know these common reasons companies deny claims:

• Pre-existing issues: Conditions that existed before coverage started aren't covered.
• Maintenance responsibility: Documented gaps in routine maintenance can lead to a denied claim.
• Disaster damage: Fires, floods and storm-related damage fall outside home warranty coverage. Those losses belong to your homeowners insurance policy instead.
• Excluded appliances: Not every appliance is covered, and included items vary by plan.
• Appliance age: Older appliances may get reduced coverage or none at all.
• Unauthorized repairs: DIY repairs done without the provider's prior approval void the claim.
• Negligence: Damage from misuse or improper operation isn't covered.
• Policy exclusions: Each policy has its own exclusion list. Review it before filing a claim.
• Timely reporting: Reporting a breakdown late can lead to a denied claim.
• Installation issues: Breakdowns caused by improper installation aren't covered.

Appliance owners who maintain their appliances, read the policy and ask their provider about specific exclusions before a breakdown are less likely to get a denied claim.

Ask your provider what optional coverage is available to supplement your standard plan.

Home appliance insurance (or home warranty) helps pay for repairs and replacements of your appliances and home systems, everything from plumbing to refrigerators. We’ve covered what it is, the different types, what’s covered and how it works to help you decide if it’s right for you.

This coverage reduces your repair costs but doesn't eliminate them completely. You'll still pay service fees or deductibles for each repair visit.

Why Trust MoneyGeek? 

MoneyGeek analyzed quotes from multiple insurance providers across the U.S. using a profile built around the average homeowner. Sampling different locations and companies produces a reliable estimate of what homeowners actually pay, and shows how much those figures vary across insurers.

Methodology

MoneyGeek evaluated homeowners insurance carriers using premiums and insights from the official databases of Quadrant Information Services. The analysis was built around a sample homeowner profile reflecting a good credit score (769 to 792), a home constructed in 2000, wood-frame construction and a composite shingle roof.

Unless otherwise specified, quotes were collected using standard coverage limits of $250,000 in dwelling coverage, $125,000 in personal property coverage, $200,000 in personal liability coverage and a $1,000 deductible.

We also compiled data for policies with broader coverage to determine the best companies for insuring expensive homes, upping limits to $1 million in dwelling coverage, $500,000 in personal property coverage and $1 million in liability coverage.