Home Warranties

Understanding Home Warranties: What Homeowners Need to Know

When it comes to protecting your home, most people think first of Homeowners Insurance. But there’s another layer of protection that can help you manage the cost of everyday breakdowns: the home warranty. While not insurance, a home warranty can play a valuable role in your overall home protection strategy—especially if you own older appliances or systems.

What Is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of many of the major systems and appliances in your home that fail due to normal wear and tear. Commonly offered on an annual basis, it provides homeowners with access to a network of qualified service technicians and can save time and money when unexpected problems arise.

What Does a Home Warranty Cover?

Coverage varies by provider and plan, but typical home warranty contracts cover:

• Home Systems:

  • Heating, Ventilation, and air conditioning (HVAC)

  • Electrical systems

  • Plumbing systems (pipes, drains, water heaters)

• Appliances:

  • Ovens, ranges, and cooktops

  • Refrigerators

  • Dishwashers

  • Washers and dryers

  • Built-in microwaves and garbage disposals

Many companies offer optional add-ons for:

• Pool and spa equipment

• Well pumps

• Septic systems

• Roof leaks

• Secondary appliances

What’s Not Covered?

It’s equally important to understand what a home warranty does not cover. Common exclusions include:

• Pre-existing conditions or improper installation

• Structural components (like walls, floors, or windows)

• Cosmetic issues (e.g., dings or dents)

• Failures caused by lack of maintenance or misuse

Home warranties also limit coverage amounts and may deny claims if maintenance records can’t be provided.

How Does It Work?

1. Choose a plan: Homeowners purchase an annual warranty, often costing between $300 and $700 depending on coverage.

2. File a Claim: When a covered item breaks down, the homeowner contacts the warranty company.

3. Pay a service fee: A Contractor is dispatched, and the homeowner pays a flat service fee—typically $75 to $125.

4. Repair or replace: The technician repairs the item or recommends replacement, subject to the Policy’s terms and limits.

Benefits of a Home Warranty

• Budget protection: Helps reduce the financial burden of sudden repair costs.

• Convenience: Access to a vetted network of service professionals.

• Peace of mind: Especially valuable for first-time buyers or owners of older homes.

Drawbacks and Considerations

• Service delays: Some companies may take longer than expected to dispatch contractors.

• Coverage disputes: Fine print can result in denied claims, frustrating homeowners.

• Limited provider choice: You often can’t choose your own technician.

Before buying a plan, read the terms carefully, compare providers, and understand the service limitations.

When Is a Home Warranty Most Useful?

• During the first year after buying a home: Especially if you’re not sure of the age or condition of appliances.

• With older homes: Where systems may be nearing the end of their usable life.

• For sellers: Offering a warranty during a sale can provide reassurance to buyers and reduce post-sale disputes.

Home Warranty vs. Homeowners Insurance

A home warranty isn’t a substitute for homeowners insurance, but it can be a helpful tool for managing maintenance costs and reducing the stress of unexpected repairs. Before purchasing, evaluate your home’s age, your risk tolerance, and each provider’s reputation and coverage details. With the right plan, a home warranty can bring added confidence to your daily homeownership experience.