A home warranty covers the hiccups and breakdowns of a house’s appliances and systems. Depending on the policy, it may cover only systems (e.g. heating and air conditioning), only appliances (e.g. washer and dryer), both categories, or a custom list that you select item by item. A warranty could save you thousands, providing that what breaks (and how it breaks) is covered.

Do you need a home warranty? That depends on the current state of your systems and appliances, whether you’d rather shell out upfront for potential problems rather than risk larger bills down the line, and how okay you are with leaving the selection of repair people up to your provider.

Surfing the web for customer reviews on different home warranty providers can raise eyebrows and questions. Most issues arise from the fact that people who purchase home warranties don’t fully understand their policy, and get disappointed—and heated—when it doesn’t work like they anticipated. Take angry complaints with a grain of salt. They primarily serve as a reminder to read contracts before signing.

Common causes for denied service:

  • Improper maintenance
  • Pre-existing condition disclosed in home inspection
  • Code violations
  • Unusual wear and tear
  • Improper installation
  • Things only covered by insurance

Consult the Better Business Bureau (BBB) for references on providers. Aggregating websites, like Angie’s List, are generally pay-to-play—businesses that pay for a subscription can effectively white-wash their online record. The BBB’s information on home warranty providers is far more reliable. Companies have to actively resolve complaints in order to maintain a passing grade with BBB.

The best home warranty providers make sample contracts available on their website. A home warranty will only serve you if it covers what breaks—and with the tricky waltz between inclusions and exceptions, you can’t assume anything about a policy’s coverage. Take the time to print out and read the fine print, and if a company makes that hard to do, cross them off your list.

Home warranty providers contract with technicians and repair-people, calling on their roster whenever you ask for a service appointment. According to some industry professionals, these contracted workers are generally not in the top tier of their profession. Established companies with a good reputation have no reason to work under a home warranty provider with whom they’d have to share revenue. Any good home warranty includes a work guarantee, though, which is both a vote of confidence and a safety net. If something isn’t adequately fixed, they have to come back and make it right.

That said, provider-sourced contractors may lean on the excuse that the warranty doesn’t cover “fall out work”—repairs or renovations necessitated by the original fix. If resolving a plumbing issue leaves a gaping hole in the drywall, getting it patched and painted will be up to you.

Newer, high-tech appliances tend to pose more nuanced problems than their low-tech predecessors. And energy efficient appliances, growing in popularity thanks to a push for green tech, are particularly complex. It’s a bit like working under the hood of an old stick-shift versus a computerized automatic. Add that to the fact that appliances and systems have an all-too-brief expected lifetime, and you have a good argument for getting a home warranty. If you’re tempted to tinker with your machines after securing a policy, keep in mind that DIY fixes could void your home warranty.

The lifespan of most appliances and systems is around ten years. You can expect to make several repairs to keep them running during that time. With an average of ten items in a home that run on this schedule, you can expect a fairly steady rotation of needed fixes. If you have multiple repairs in a year, a home warranty can save you thousands.

Commonly covered systems and appliances:

  • Refrigerator
  • Dishwasher
  • Range/Oven/Cooktop
  • Clothes Dryer
  • Built-in Microwave
  • Free-Standing Ice Maker
  • Washer
  • Dryer
  • Garage Door Opener
  • Trash Compactor
  • Heating w/ Ductwork
  • Electrical
  • Water Heater
  • Garbage Disposal
  • Air Conditioning
  • Ceiling Fan
  • Doorbell

Here are some common, mid-level fixes to the systems and appliances found in most homes.

However, if you don’t have any problems for a few years, you could have saved the money you spent on a warranty to pay for an expensive repair later on. If you end up having one or fewer issues a year, a home warranty is hard to rationalize.

If you’d rather not spin the roulette wheel with a home warranty (Will something break? Will it be covered? Will the repair instigate further, uncovered issues?), you could just create a rainy-day fund—a savings account earmarked for home repairs. Commit to regular deposits, whether monthly or annually. If nothing breaks, you won’t have shelled out for an unused policy. If something does, you won’t feel quite so burdened by the bill.

A home warranty is distinct from homeowners insurance in that it covers what’s inside your home, rather than the home itself. That’s painting in broad strokes, of course, but the basic division between the two forms of property protection is that insurance covers what makes your house a house—the structure—and a warranty covers what makes your house a home—the functions that provide environmental comfort, clean clothes, hot meals.

Homeowners insurance typically covers:

  • Damage to the interior and exterior of your home caused by covered perils (e.g. natural disaster, fire, theft, vandalism—coverage varies by policy)
  • Loss or damage to personal property caused by covered perils
  • Liability (if someone is injured on your property)

Home warranties typically cover:

  • Essential appliances and systems
  • Plumbing
  • Electrical
  • Additional optional extras, like swimming pools, hot tubs, and out buildings

If the damage to mechanical equipment was caused by a covered peril—e.g. an electrical fire takes out your oven—a homeowners insurance policy will cover it. If the oven simply malfunctions, not due to any external cause and not arising from a lack of routine maintenance, a home warranty will cover it. Insurance covers big problems, and the little problems branching off of it. Warranties cover little problems stemming from more everyday sources, like manufacturing defects.

Another difference between homeowners insurance and a home warranty is the pricing structure. With a homeowners insurance policy, you pay a premium and then a deductible on every claim. When the cost of repairs goes beyond the deductible, the insurance company assumes the remainder. With a home warranty, you pay an annual fee and then a service call fee when a technician comes out to your house to make a repair. The service fee is typically under $100.