Home warranties buy you some peace of mind, but at a high price. Their fine print shows there are a lot of things they don’t cover, so the odds of your filing a claim are fairly small. Like extended warranties on cars and other big purchases, they are highly profitable to the companies, but not a good deal for the consumer. The best indicator of this is something called the payout ratio, which is the share of premiums collected that an insurance company pays out in claims. It’s pretty small for home warranties–perhaps 50 percent or so. That said, it’s so common and expected in home purchases, the buyer can still demand the seller pay it.
As for renewing it after one year, that really makes no sense.