Home warranty insurance is distinctly separate from homeowners insurance. Home warranty insurance covers new items such as appliances. Items covered through a warranty policy include items such as refrigerators, heating and cooling units, hot water heaters, plumbing and even the garbage disposal.

If you have purchased an existing home, the buyer will usually purchase the policy. If you are purchasing a new home, the builder supplies you with the policy. Generally, on an existing home, the policy covers the first year. On new homes, the policy varies according to the builder's offer.

When the initial policy approaches expiration, the homeowner is given the option to renew the policy at their expense. The costs will vary according to the insuring company. The decision to renew is strictly a personal one. Take into consideration the age of appliances including the large items that came with the home. Many times it is cheaper to replace an item than to renew the home warranty policy. Read the policy in full before renewing including the fine print. The renewal may be different than the original policy that was offered.

The way in which these policies work is that if a problem arises with a covered item, you place a call to the insurance company who in turn sends out one of their contract repair companies. After the initial investigation of the problem, the repair company reports back to the insurance company who then decides what action is to be taken. As you can see, this could amount to several days before your problem is resolved. There also can be a charge for this service, usually in the area of $50.

Since all insurance claims are reported to C.L.U.E., keep in mind that any claim you file with an insurance company is recorded and maintained, which may or may not affect your credit or the ability to be insured at a future date.

As with any other type of insurance, it is important to know the impact of filing a claim or even calling to inquire about coverage. All in all, home warranties may be worth the money for some and not for others. Investigate the company and its contractors first, then decide whether to sign up or just tuck cash away for those inevitable repairs.