Home protection plans vary by state, but as of 2015, many home protection plans cover repair of dishwashers, furnaces, water heaters, ductwork and electrical systems, according to About.com. Depending on the type of protection plan, some insurance companies agree to pay for the replacement and installation of new household appliances.
In addition to paying an annual fee to maintain a home protection plan, homeowners must also pay a service fee for each repair, states About.com. Insurance companies select specific repair service companies to complete appliance and home system repairs. Repair service companies contact homeowners to set up all repair or appliance installation appointments.
Insurance companies can deny an insurance claim if a household appliance or home system exhibits excessive wear and tear, if appliances or system components were not installed or maintained properly, or if the appliance or system violates current residential housing codes, About.com explains.
Items and systems typically exempt from home protection plans include spas, pools, faucets and sprinkler systems, reports About.com. However, insurance companies often provide enhanced coverage options for pools and septic systems, Realtor.com states.
Home sellers typically offer home protection plans as an incentive to home buyers, explains Realtor.com. Sellers also rely on home protection plans to reduce repair costs when trying to sell a home.