What is a home warranty?

A home warranty is specifically designed to cover the repair or replacement of certain household items and systems that may fail due to normal wear and tear. This typically includes major appliances such as refrigerators, ovens, dishwashers, and home systems like plumbing, electrical systems, and heating and cooling systems. By offering coverage for these items, a home warranty provides homeowners with peace of mind against unexpected repair costs, making it an attractive option for many.

The other options do not correctly describe a home warranty. Personal liability coverage pertains to protection against claims for bodily injury or property damage caused by the insured, which is unrelated to household appliance repair. A home warranty is not a real estate investment; rather, it is a service contract related to property maintenance. Similarly, a financial investment and a type of real estate investment also do not encapsulate the essence of a home warranty, which is fundamentally about the maintenance and repair of home systems and appliances rather than investment strategies.