A home warranty plan covers the repair or replacement of the household systems and appliances that home owners commonly use, including air conditioning, heating, plumbing and electrical systems, as well as items such as microwave ovens, dishwashers or washing machines. When you have a home warranty plan and an important household item breaks down, you don't have to try to find the cash to replace or replace the item - you simply make a telephone call and a qualified repairperson is dispatched to your home to resolve the problem.

If you're thinking about purchasing a home warranty insurance plan, do your research and compare plans to ensure that you choose a plan that's right for you and the contents of your home. Here are some tips for choosing a plan that works for you.

1. Determine whether you need a home warranty plan. To give you an idea of whether a home warranty plan makes economic sense for you, do a stock take of all your major household systems (heating, air conditioning) and appliances like microwaves and dishwashers. Note down their age and when the last repairs were done. Use this information to determine the remaining useful life of each product. For example, if a microwave is 8 years old and can be expected to function well for 10 years, its remaining useful life is 2 years. These calculations can help you determine how much you'll need to spend on repairs each year over the next decade. Consider purchasing a home warranty plan if the cost works out cheaper than the cost of repairs.

2. Compare prices. Call a number of home warranty plan companies, ask for quotes and compare prices. The average home warranty plan will cost $250 to $500, depending on what is covered.

3. Compare plans. Plans offer varying levels of coverage depending on the age of a home and the average age of its contents. Make certain you know what the plan covers; if your dishwasher is on its last legs, but a plan won't cover it, then you'll want to consider another plan. Basic plans cover essential systems like heating and air conditioning and premium plans, which are more expensive, cover most household items. There are also optional or extras plans that cover items like pools, spas and even electronic equipment.

4. Ask questions. Find exactly what the home warranty plan covers. Always read the fine print in every policy document. Find out whether the plan covers only certain kinds of repairs and replacements and whether there is an additional fee charged for service visits or certain repairs and replacements. Make sure you know whether the company charges a fee for non-urgent service calls that are made after hours or on weekends.

5. Find out how repairs are made. Does the home warranty insurance company use new or used parts when repairing appliances and systems? Find out about how long it usually takes for a repair person to arrive at your home.

Finally, make sure the home warranty insurance company is available 24 hours a day, 7 days a week, including weekends and holidays, so they're there when you need assistance. A home warranty company should have a toll-free number so it doesn't cost you money to call.