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A homeowner can save money by having a home warranty plan on their homes electrical system, said Lisa Kappes, vice president of communications at the National Association of Home Builders (NAHB).

“We recommend consumers shop around and check for different warranties as some are more expensive than others,” Kappes said. “If there is a warranty available, go for it.”

To keep costs down, many contractors will use a few different manufacturers of warranties, Kappes said.

What is the difference between home warranties and warranty plans?

According to companies like First American, home warranties are a collection of policies that protect your home’s mechanical, electrical and plumbing systems. The homeowner typically pays a small fee to have those warranties in place, but is protected from major losses should an issue occur. A warranty plan, on the other hand, is a contractual agreement that protects the homeowner from major problems if the company underwrites the warranty.

Some homeowners purchase a home warranty and add the necessary paperwork to it for homeowners association (HOA) approval, Kappes said. However, some homeowners do not make use of an HOA’s approval and simply purchase a home warranty from a single company. “We are not in the business of insuring anything other than what we sell,” said Kappes, who added that he is unaware of any company that offers home warranty coverage. In an effort to help homeowners know about the different types of warranties, the company also offers a section on its Web site detailing the terms of various warranty plans, including the most common ones. Many of the policies are available to homeowners that have a homeowner’s association (HOA) and/or homeowner’s insurance policy in place. The policy owners can select the service they want from one of three companies to provide them the service. The plans are offered as a warranty plan, a service plan, and as a liability plan. A warranty plan protects a homeowner against warranty claim disputes. The term warranty means the homeowner’s policy that covers claims will also provide the owner with a policy covering their personal liability for damages. The service plan does not offer any benefits, but covers the cost of an outside professional’s time and effort while performing the work for the owner. The liability plan covers the homeowner for their responsibility in damages caused by their personal property while it is in the owner’s care. Owners who use the services are required to select one of the three plans. The HOA or homeowner’s insurance policy can be used to cover homeowners that are not currently using their plan. The homeowners can choose a plan from a list of options, or use an existing HOA policy. Some of the plans offered by the service provider are:

Policy : A basic liability plan for homeowners.

A basic liability plan for homeowners. Plan 1 : Includes a basic liability plan, liability for damages, homeowners association dues, homeowners association premiums, homeowners insurance coverage and optional features such as personal liability for damages, home improvement contributions.