When times are tough, we all look for ways to better plan repairs and cut unexpected costs. If you own a home, you may be more tempted to purchase a home warranty to help avoid the financial surprise of an unexpected repair.

But the real question is whether home warranties truly offer the peace of mind they claim on the brochure. Will owning a home warranty cover an air conditioner that gives out mid-summer, or a water heater that leaks and turns your basement into a swimming pool. The answer is: maybe.

The real value of a warranty, and how much will it help if something goes wrong, depends a lot on the age of your house. The older the home that's covered, the better the chances of savings on system repairs and replacements. But the devil is in the details as many home warranties exclude coverage for elements it deems have a high risk of costly repair. This however, is exactly why you might consider buying one.

Here are the most important elements to understand:

• What you get: Warranties for existing homes aged five years or more cover normal wear and tear rather than pre-existing conditions. Interior plumbing, HVAC, electrical systems, kitchen appliances, water heaters and electric garage door openers are usually under the coverage umbrella, with the option of adding coverage for such items as swimming pools. Basically service contracts, home warranties specify how issues will be addressed and who will handle repairs and replacements in the event of a problem. The coverage agreement may also include standards for homeowner maintenance, so be sure to keep careful records of your home care routine.
• The cost to you: Most warranties specify out-of-pocket costs to the covered party, such as fees for service visits or deductibles.
• How long coverage lasts: A warranty for an existing home typically lasts for a term of one year from the close of the property sale, and is usually renewable by the homeowner before that year is up.
• To renew or not to renew: This is the big question for many homeowners who receive the bonus of a warranty with their new-to-them home. Careful assessment of the home's systems and components is key, because age has everything to do with the likelihood of having a breakdown covered by the policy and thus the potential for saving on repairs and replacements. The $200 to $600 cost of a year's coverage becomes a sweet deal if your home ends up needing a new furnace or other big-ticket item during that time.

Home warranties are also on the way to becoming a standard element of the deal in existing-home sales. Not a requirement as with new builds, they're instead a way for sellers to sweeten the deal by offering peace of mind to the buyer and protection for themselves after the sale.

Bottom line...as a former professional home inspector who has seen the impact of age on mechanical systems, I think you are usually better off insuring yourself by starting a household savings account to cover unexpected repairs. Take the same bet that the warranty companies do: you're not likely to need as much money as you put away. The difference is, of course, that you get to keep what's left over.

Tom Kraeutler is the AOL'S Home Improvement Editor and co-author of My Home, My Money Pit: Your Guide to Every Home Improvement Adventure. He delivers home improvement tips each week as host of The Money Pit, a nationally syndicated home improvement radio program. For a free download of his latest publication, Your Complete Replacement Window Guide, visit myhomemymoneypit.com.