How to Protect Yourself

Like all insurance policies, home ­war­ranties come with their share of ­restric­tions, exemptions, and, yes, head­aches. Michael Marshall, a ­buyer's agent in Worthington, Ohio, says homeowners often discover that things they thought were covered are, in fact, not. "Home war­ranties are a good ­value, but they can be difficult to deal with," says Marshall, who has success­fully challenged insurers on behalf of clients denied coverage for reasons that include improper care and maintenance, ­ex­cluded parts and services, or dollar ­limits for certain repairs. He likens ­warranty companies to HMOs, "trying to do the cheapest fix."

The best way to protect yourself is to read the fine print, says Heather Wilson of American Home Shield: "We cover normal wear and tear, so maintenance is required on the part of the homeowner." In addition to exclud­ing mold and weather-related damage, the company's basic warranty does not cover certain appliances, such as ­solar panels and solar water heaters.

For most people, the question of whether or not to renew a warranty that came with the house depends on the age of the appliances and whether a claim was successfully filed during the first year. You just have to decide if you're willing to pay a premium for services you may not need—and what that peace of mind is worth to you.

New Orleans ­residents Nicole Eiden and Michael Harvey received a warranty from Michael's parents as a housewarming gift after they bought their first house last year. And it's a good thing they did. They're now ­using it to ­absorb the costs of some unexpected repair work on a refrigerator and dishwasher that started showing signs of decline just ­after they moved in. "If you use them right," says Nicole, who plans on renewing the policy next year, "they can be pretty helpful."

Homeowner Tip:
"Keep good maintenance records. If you can't show you've taken care of items covered by your policy, your provider might refuse to replace them if they break."
—Reba Haas, Seattle, Wash.
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