Home Warranty
Looking for a home warranty plan? A home warranty plan that protects your home appliances and systems. Learn everything you need to know about home warranties here! Call to get your custom quote.
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What is a home warranty?
A home warranty is a service contract that helps protect a homeowner by covering the costs of certain home repairs and replacements due to normal wear and tear.
It is important to note that a home warranty is separate from your homeowners insurance. Insurance typically protects a homeowner from unexpected issues that are more catastrophic in nature, such as a fire, flood, etc.
Your home warranty covers your home’s major components, such as the furnace, air conditioning, plumbing, and electrical system. Depending on the contract, a home warranty may also cover major appliances such as refrigerators, washers and dryers, and sometimes even swimming pools.
How Does a Home Warranty Work?
Once you find a home warranty service provider and sign the contract, there is a set process you’ll have to follow when submitting a claim. If one of your covered appliances or systems breaks down, here’s what you should do:
- File a service request claim: You’ll contact the home warranty company to alert them to the issue. Let them know what appliance is broken and the manufacturer of the unit.
- Schedule an appointment: The home warranty company will locate a third-party service provider in their partner network and have them contact you. Note that some companies allow you to choose your own service provider.
- Repair or replace the appliance: The service provider will come to your home to diagnose the problem. The warranty company will then either pay for the repairs (parts and labor) or the replacement of the item.
- Pay your trade call fee: This service fee acts like a deductible for your home warranty policy and you’ll have to pay each time you file a claim. If the repair is less than the fee, you only pay the smaller amount.
What Does a Home Warranty Cover?
Home warranty coverage varies according to plans. Typically, a provider offers three types of home warranty plans: systems plans, appliance plans, and combination plans.
- System plans cover major home systems like your air conditioning, heating, ductwork, HVAC, plumbing, water heater, garbage disposal, smoke detectors, ceiling fans, and doorbells.
- Appliance plans cover most appliances like your refrigerator, dishwasher, range, oven, stove, built-in microwave, clothes washer and dryer, garage door opener, and freestanding ice makers.
- Combo plans cover both systems and appliances. This plan tends to be the most popular option, and home warranty companies often include extra perks with their combination plans.
Some home warranty companies offer custom plans where you mix and match items you want to be covered. Many providers also provide optional coverage for miscellaneous items, such as your pool, hot tub, spa, or second refrigerator. Customers add these items to their plan for an additional cost per month.
What home warranties don’t cover
Plans cover your major systems and home appliances, but they don’t cover everything that can go wrong. Generally, home warranties do not cover issues related to:
- Preexisting conditions
- Improper installation or maintenance
- Code violations
- Items typically covered by home insurance
- Unusual wear and tear
- Structural elements
- Smart devices
- Solar panels
- Fireplaces
- Mold
- Commercial-grade appliances
- Items under manufacturers’ warranties
How to get a home warranty
Purchasing a home warranty contract is a fairly straightforward process, but there are certain steps you’ll want to follow and factors to consider before deciding on a policy.
- Assess your needs: If you’re thinking about getting a home warranty for a home you’re purchasing, start by making an inventory of all the major appliances and home systems that are included in your new house. Take note of how old they are, when they were last serviced and if any of them already come with a warranty. A home warranty is only worth it if there’s a reasonable likelihood you’ll need to repair or replace something that’s not covered by an original warranty within the next year.
- Shop around for plans: As with any insurance policy you buy, you should get quotes from at least two or three home warranty providers. Each will be able to offer something different, but your typical home warranty cost will fall into the range of $300 to $800 per year. If you have specific needs for your home, like coverage for a pool, septic tank or sump pump, make sure the provider includes these add-ons in your estimate.
- Examine your plan carefully: It’s important to read the fine print on any contract, but this is especially true for home warranties. Make sure everything you think is covered is in fact covered — don’t assume anything. For example, a home warranty may exclude repairs for certain parts of a dishwasher, or it may only cover one of your two refrigerators. Each plan stipulates key things like what components are excluded, the maximum coverage amounts, the waiting period before coverage starts and how long a repair is guaranteed.
- Negotiate with the seller if buying a home: If you’re in a buyer’s market, you may be able to get the seller to cover the cost of your warranty as part of your closing negotiations. Sometimes the seller will even market their home to include a free, yearlong home warranty plan to entice buyers. Note, however, that the seller is under no obligation to provide one and will only do so if they feel it’s worth it.
Pros and Cons of a Home Warranty
Benefits of home warranty protection plans
The advantage of home warranty is that it offers a sense of reassurance. One can enjoy financial security during unforeseen breakdowns and enjoy the access to skilled and vetted technicians.
Kitchen appliances, electrical systems, and plumbing fail or break down often. Thus, having some basic home warranty protection plans is also useful as it covers the replacement and repair costs. It is a wonderful option helping avoiding spending dollars.
Home warranties cover home appliances and systems breakdown under certain circumstances. Failures caused by hazards, natural disasters or neglect have no coverage.
A home well-maintained less than 5 years old may experience fewer or no significant repairs. At such time the doubt may come is it worth paying for home warranty protection. But, taking a home warranty is an economical decision, in case unfortunately something stops working.
The home warranty protection plans offer more value in the market to the home. The home warranties of the transferrable type favor buyers. It instills a trust in the home condition.
On purchasing plans of home warranty protection, the household items are covered. In fact, some companies also offer cover on older devices regardless of its condition. It needs signing up after reading carefully the agreement.
Home Warranty Coverage Limits
No matter what your home warranty plan covers, annual coverage limits will determine how much the company will pay to diagnose, repair, and replace each covered item. Of course, these coverage limits vary dramatically by company. For example, one home warranty plan might cap coverage at $500 per appliance, while another might cover up to $5,000 per item. Sometimes contracts have separate caps for each item, such as $500 for the washing machine and $1,000 for plumbing.
Keep in mind that the plans also have aggregate limits—the total amount the company will pay for all covered losses during one time period (usually a year). So, for instance, the plan may cover up to $5,000 per item, with an aggregate for all claims of $15,000.
Home Warranty Exclusions
Coverage inclusions and exclusions are where a home warranty provider lists the specifics of a plan’s coverage. The agreement may state that you have coverage for broad items, like “refrigerator” or “electrical system,” but that doesn’t necessarily mean all parts and components in those items are covered.
Home warranties generally provide coverage for items related to the essential function of each system or appliance. For example, your home warranty plan might cover your kitchen refrigerator, but it might not cover nonessential repairs. If a rack or shelf breaks, it won’t affect the essential function of a refrigerator, which is to keep items cold.
In this example, the fine print of your contract might look something like this:
Included
Individual components
Individual back-end parts
Integral freezer units
Excluded
Racks and shelves
Ice makers and ice crushers
Beverage dispensers and water lines
Leaks and food spoilage
Hinges, glass and lighting
What Does a Home Warranty Cost?
The cost of a home warranty will vary by company and coverage plan. On average, a home warranty costs around $25-$150 per month. However, there could be additional charges in the form of optional add-ons, deductibles (anywhere from $50-$200), and service fees (typically $60-$100 each time a technician comes to your home).
In the event of a major repair or replacement item is needed, such as an HVAC system that can cost anywhere from $5,000 to over $12,000 to replace, sometimes a home warranty can practically pay for itself. When considering purchasing a home warranty, homeowners should create a list of the home’s major appliances and systems, their ages, and which are most at risk of breaking down or needing replacement. Then, the homeowner can decide which home warranty would best meet their needs.
Pros and Cons of a Home Warranty
Home warranties play important roles in protecting your home’s appliances and protecting you financially. There are a few downsides to consider though, so make sure you’re making a fully informed decision if you choose to buy a policy.
Pros
- Provides peace of mind for costly repairs
- Means lower repair costs on unanticipated breakdowns
- Offers set premiums and a known deductible for repair costs
- Protects major appliances as they age, unlike homeowners insurance
Cons
- Doesn’t cover all appliances
- Even covered appliances lose coverage when they aren’t properly maintained
- Requires you to pay premiums all year, even if you don’t end up needing coverage
- Won’t cover damage from fire or other disasters
- You may have to use the warranty company’s network of contractors and service people
What is Homeowners Insurance?
Homeowners insurance coverage typically includes any accidental damage to your home and belongings due to theft, storms, fires, and some natural disasters. There are four primary areas covered under a homeowners insurance policy:
- The interior of your home
- The exterior of your home
- Personal property in case of theft, loss, or damage
- General liability that can arise when a person is injured while on your property
How Does Homeowners Insurance Work?
So, for instance, say a pipe breaks and floods your kitchen. An insurance adjuster will come to your home and fill out a claim to repair or replace any damaged items in your home. Once the claim is approved, the insurance company will deduct the amount of your deductible and issue you a payment for the rest of the balance to repair your home. This deductible can also assist in lowering your yearly policy premium. The higher your deductible, the lower your yearly house insurance policy will cost. The National Association of Insurance Commissioners is a terrific resource for more information on home insurance, such as buying homeowners insurance and understanding what is not covered by homeowners insurance.
How Much is Homeowners Insurance?
A home insurance policy is usually mandatory, and a bank will generally require you to obtain one before issuing a mortgage on a home. In terms of typical homeowners insurance cost, the policy is renewed yearly, and its average annual cost is $1,312; though, this cost varies widely from state to state. All home insurance policies offer a deductible, which you’ll pay when your claim is approved. The policy will then take care of any additional costs. Of course, you’ll want to do your research when it comes to home insurance comparisons, as different home insurance companies offer different rates and deductible requirements.
What is the Difference Between Home Warranty and Home Insurance
A home warranty contract and a home insurance policy operate in similar ways. Both have a yearly premium and a deductible, although a home insurance premium and deductible is often much higher than a home warranty’s. The main differences between home warranties and home insurance are what they cover. Home insurance will help homeowners to pay for structural damage and loss of personal property from emergencies like theft or fire, while a home warranty covers repairs and replacements of a home’s systems and appliances when they fail from old age and normal wear and tear.
Another difference between a home warranty and home insurance is that home insurance is generally required for homeowners (if they have a mortgage on their home) while a home warranty plan is not required.
A home warranty and home insurance provide protection on different parts of a home, and together they can protect a homeowner’s budget from expensive repairs when they inevitably crop up.
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