After moving into your dream home, the last thing you want to experience is something breaking down. That’s why many homebuyers purchase a home warranty at closing. A home warranty is a service contract that covers repair and replacement costs of certain household appliances and systems no longer under the original manufacturer’s warranty.

When we purchased our home in El Cerrito, San Diego, the hot water heater and furnace were some of the oldest our home inspector had ever seen, both were installed before we were born! Since they functioned, we knew we wouldn’t be able to ask the seller for a credit or replacement (they weren’t broken, after all, they miraculously still worked in their old age), but we knew what we should ask for, and that was a home warranty! We were able to negotiate a year-long home warranty that the seller paid for (and we’re great at negotiating it for our buyers when we represent them too), and we actually even paid for an extra year of home warranty ourselves because we knew those units were old and likely going to fail after we moved into the home, especially within the first two years.

Needless to say, a short three months after closing, our furnace failed and we were able to utilize our home warranty to replace it for minimal cost. It was a life-saver that we had the home warranty, as a repair that would have cost us thousands ended up costing us several hundred. A home warranty is a great way to protect yourself from unexpected repairs when moving into a new home.

ConsumerAffairs.com created a guide to the best home warranties in San Diego. Here are their answers to common questions about this important topic:

What does a home warranty cover?

Home warranties cover select home appliances and systems that break down from aging and wear and tear. Home warranty companies usually offer two or more tiers of plans. You can also customize coverage based on your needs and budget.

Commonly covered appliancesCommonly covered systemsOven, range, stoveAir conditioningRefrigeratorHeatingDishwasherElectricalBuilt-in microwavePlumbingWasher and dryerWater heaterGarbage disposalCentral vacuum

You can also for things like a pool/spa, second refrigerator, stand-alone freezer, sump pump and well pump. Understand that a home warranty is different from homeowners insurance, which covers damage or loss from events like theft, fire and storms.

How does a home warranty work?

Most home warranty plans work similarly. When a covered item breaks down, you can request service online or over the phone. You pay a trade service call fee, which is like a deductible, for each claim (usually between $50 and $125), and the company sends a local contractor to your home. As long as the problem is covered, the home warranty company pays for repair or replacement.

How much does a home warranty cost?

A home warranty in San Diego costs anywhere from $200 to $900, depending on the level of coverage and the amount of the service call fee. You can choose to pay monthly or annually. A contract typically lasts one year and is renewable.

What else should I know about a home warranty?

Always read a home warranty contract carefully to learn what’s covered and what’s excluded or limited. Home warranties are generally transferable to new homeowners and cancelable anytime.