Appliance Insurance - Security, or a Rip Off?

We’re getting a new dishwasher today. I cannot tell you how exciting this is. We just bought our home a year ago, and within a couple of months of being in the house, the dishwasher broke.

Lovely.

We tried fixing it ourselves, and it worked for a little while, but then it spewed water all over the kitchen.

So, my fiancee had me go out in search of a new dishwasher. Unfortunately, because we have just started consolidating finances and budgets, the pot for home emergencies is pretty low (we’re putting almost all of our extra budget into credit card payoff), and the $400 + $150 for install was going to be a rather large expense.

Then, we remembered something about a “home warranty” with American Home Shield that came with the home when we bought it. After washing dishes by hand for eight months, this was a brilliant thing to remember, especially since the policy was less than a month away from expiring.

AHS was very pleasant to deal with. They sent out a service rep who confirmed our dishwasher was pretty busted, but still possibly fixable, and AHS wound up giving us $215 credit towards a new dishwasher. Since they get dishwashers in bulk for a discount, our total cost with install is about $175, instead of the $550 we were anticipating. Glorious.

But should we renew? Well, for a year of coverage for everything from dishwashers and tubs to the air conditioner and roof, it costs $500 per year.

We decided: $500 is MUCH better put towards a safety reserve for the house in case something big breaks, because unless your air conditioner goes out, it isn’t worth it. Plus, most things in the home (shouldn’t) wear out for at least a couple of years, enough time for us to build a larger reserve.

However, for a house we have just bought that is older (ours is 40+ years old) I don’t think I would consider buying unless the seller had purchased such a plan to ensure peace of mind for at least the first year.