QUESTION: My wife and I just made an offer on our first home which was accepted. We close in November. A colleague at work said I should take out a home warranty on the home since it is our first one. He said it’s like an insurance policy only better. Is this correct?

What is a home warranty and should we take out a policy? And if we do, do we then not need to take out homeowner’s insurance?

ANSWER: First, congratulations on buying your first home. Second, do not listen to your colleague at work. He is giving you bad information.

A home warranty is different, much different, from homeowner’s insurance. Homeowners insurance covers major threats such as hail, property crimes and fire that damage the house’s structure or homeowner’s possessions.

A home warranty covers only specific house components such as air conditioning, furnace, plumbing and electrical systems and major appliances such as dryers, washers, refrigerators and swimming pools.

Even if you take out a home warranty, you still need to take out homeowner’s insurance. That is mandatory. A home warranty is optional.

The major advantage of a home warranty is that it can save homeowners the cost of unexpected or major repairs as well as the responsibility of locating reputable local contractors. They are especially valuable to homeowners with expensive appliances.

Homebuyers who don’t know much about maintaining a home or have spent all their savings on the home and have little in reserve for expensive repairs may also find a home warranty valuable.

The major disadvantage of home warranties is that they do not cover items that have been poorly maintained, which can sometimes be difficult or impossible to define.

In addition, a home warranty can have numerous exclusions and limits on the amount spent on annual repairs. While a home warranty is cheap compared to the cost of a major repair or replacement of a covered item, if nothing breaks down the cost of the warranty is wasted.

In conclusion, home warranties do not provide a solution to a homeowner’s risk. If you do decide to buy a home warranty, make sure you read the fine print very carefully, and that you research the company selling the warranty to make sure it is a reputable company.

Linda Goodspeed is a longtime real estate writer and author of “In and out of Darkness.” Email her at: