A home warranty pays for the repair or replacement of certain mechanical systems and appliances when they break. It is typically purchased by the buyer or seller of an existing home at the time of sale. Builders typically provide a different type of warranty on new homes. The home warranty does not cover damage done by fire, wind or other hazards covered by homeowners insurance.

A typical one-year home warranty costs $300 to $600, but prices and coverage varies widely. Before buying a home warranty, read the fine print to see exactly what is and is not covered and for how long.

You can find some good articles on home warranties: http://homebuying.about.com/cs/homewarranties/a/home_warranty.htm and

http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/AHomeWarrantyIsNoGuarantee.aspx