So far, you’ve learned what a home warranty is and how they work, as well as what items and systems are under limited or extended warranty. Now comes the next part of our series: What do you do when an item or system in your home suddenly breaks down — pay for it out of your own pocket, or have your warranty cover it?

As you may recall, a home warranty covers repairs and replacements of items and systems that experience defects and unusual wear and tear during normal use. For example, a refrigerator’s compressor — whose job it is to keep your food cold — costs between $250 and $650, according to If the compressor needs replacement after years of normal wear and tear, that expense will come out of your wallet, as the warranty wouldn’t cover its replacement.

However, if the compressor starts leaking coolant due to a defect in construction, or if the compressor drops dead long before it should be replaced — allowing the fridge and your food to warm up, by the way — then it may be time to consider whether to have your home warranty cover the costs. Even if you are prepared to drop $250 to $650 on a new compressor, remember there is an installation charge. According to, labor is $100 to $200 an hour for removing the old compressor and installing the new unit.

Therefore, if you have a home warranty that covers parts and labor, it’s simply better to use your warranty rather than take the hit yourself. Not only will it give you and your family peace of mind, but it will also spare your wallet so you can do better things with that money, like buying groceries or supplies for a family trip.

In the long run, a home warranty can save you hundreds, if not thousands, of dollars every year.  That’s definitely money you can take to the bank.