This insurance is sometimes thrown in by the seller in a real estate purchase contract. It protects the buyer from unexpected repair costs in their new home for a period of time — typically one year after purchase. Repairs on most major systems in the house (heat, air conditioning, septic, etc.) and most major appliances are at least partially covered with a low deductible.
Also, at the buyer's option, the warranty can be renewed for a few hundred dollars per year.
A budgeting rule of thumb for repair and maintenance costs on a house is 2% of the purchase price per year. This could end up be only a few hundred dollars one year but $10,000 or more another year, so unless there's a lot of money socked away, a major system failure could knock your budget for a loop.
We've kept our home buyer's warranty in force for an extra three years so far, and we've just about broken even on the repair costs compared to what it would have cost had we not had the insurance. It will more than pay for itself if something happens to our central heating and air conditioning system. We will probably drop the warranty when the system becomes so old that repairs are only lightly covered. We haven't used it for any appliances — the $50 deductible is too expensive to fix a $300 appliance that probably should be replaced anyway.
If you're very handy with fixing things and are a good judge of the condition of things, you may not have the need for this insurance. But if you want to be covered for some of the big repairs, home buyer's insurance may be a good deal.
