Home Protection Plans - Are they worth it?

[sooner0782]

My wife and I are in the process of buying our first home and seveal friends of ours mentioned purchasing a home protection plan (American Homeshield) to cover appliances and other systems in the house incase they malfunction or need to be replaced. I have started looking and reviews of the company itself to see how satisfied their customers are, but more importantly, I want to know if it's financially worth it? When I run the numbers i'm not sure it really makes financial sense and I would be better off saving the monthly premium amount so that at least I could earn interest on it instead of giving it to an insurance company. The cost of the plan is about $50 / month and each service visit is about $60 per visit. I could see the potential benefit if we had issues with the HVAC system or something more expensive. I'm weighing the pros and cons. Does anybody have any experience with American Homeshield, or thoughts on if it's worth it from a financial perspective? I'm inclined to think that all i'm paying for is the piece of mind....I would love to hear from others!

[4jacks]

Yeah, it’s not worth it. To put it simply: the company is going to take the money you give them and make a profit. In the small chance your X breaks down and you collect on it, then you win the money to repair. But like a casino, the insurance company knows it’s going to collect more than it gives out.

What you should do is have an emergency fund. When stuff breaks down you use it.

Welcome to the boards