I regularly recommend the seller to purchase a home warranty when they list their property if their home is over ten years old.  The cost is minimal compared to the cost of replacing mechanicals, plumbing repairs, appliances, etc.  The home warranty covers the seller until closing as well then it is passed on to the buyer for one year.  The buyer has the option to renew thereafter.  The seller does not pay for the home warranty until closing and the cost is around $425.  There is a flat fee for each service call which is about $100.

Recently however I have been hearing stories about the nightmares of getting things repaired by the home warranty companies.  There are conditions under which the home warranty will not cover the repair.  If the item has not been maintained in the past or if negligence is involved the home warranty company can decline the repair.

My personal experience has been generally positive.  I followed my own advice and purchased a home warranty when we downsized to a smaller older home about 3 years ago.  The day after we closed, one of our sump pumps stopped working.  I called the home warranty company and they replaced it the next day.  Savings of about $800.  A few months later my refrigerator that we moved from the kitchen to the garage stopped working. A lot of food was spoiled.  I called the home warranty company again.  Oops.  They do not cover garage refrigerators.  I should have left it in the kitchen!  The built in microwave went next.  Since it was too old to find repair parts the home warranty company offered me $350.  I took the check!  This was all within the first year!

Air conditioners are covered EXCEPT when chipmunks decide to nest inside and eat the wiring! I found this out the hard way — twice!

After we remodeled the kitchen with all new appliances the trash compactor stopped working right after the warranty on it ran out after one year.  This time the home warranty company had to send the repair technician to my house three times before they replaced the entire motor.

I think the positives far out weigh the negatives and I for one am glad to have this home warranty and plan on renewing every year.  Just remember to read the fine print!