Home warranties provide financial protection against unexpected repairs and system replacements. But their costs and coverage vary widely.
Before deciding whether a home warranty is right for you, consider these factors. Also, note that home warranties don’t cover systems and appliances that have been mistreated or improperly maintained. Read on for more details.
What Is a Home Warranty?
A home warranty is a service contract that covers the cost of repairing or replacing certain systems and appliances in your home. Typically, a home warranty covers major kitchen appliances as well as the heating and cooling system. It doesn’t cover things like windows, doors or floors and it doesn’t protect your home from damage caused by natural disasters, as homeowners insurance does.
Most buyers consider purchasing a home warranty when they have limited information about the quality of a new or previously owned house’s components or, in the case of new construction, how their appliances and systems might perform over time. A home warranty also provides peace of mind for sellers who want to cut down on post-purchase expenses after a sale.
A home warranty is different from homeowners’ insurance, as it only covers your appliances and systems for a set period of time from damage caused by normal wear and tear. Homeowners’ insurance generally covers things like fire, severe weather and theft.
What Does a Home Warranty Cover?
Depending on the plan and provider, a home warranty may cover appliances or systems that help keep your house running smoothly like the refrigerator, dishwasher, water heater, furnace and more. Many home warranties may also include coverage for the garage door, pools and other outdoor fixtures as well.
Home warranty contracts often have limitations and exclusions, which is why it’s important to read the contract carefully. For example, a home warranty won’t usually cover damage caused by severe weather or other factors that are covered by homeowners insurance.
When comparing providers, ask for sample contracts to see what coverage might look like. It’s also helpful to read reviews on the Better Business Bureau and other consumer-driven websites. You can find out if a company has good customer service, how fast they respond to claims and more. Lastly, consider if the company offers a deductible and if the policy covers everything in one lump sum (aggregate) or per item.
How Much Does a Home Warranty Cost?
Home warranty prices vary by plan type and coverage level. A basic system protection plan starts at $300 a year, while comprehensive combination plans can cost $400 or more annually. Add-ons and deductibles may also increase the annual or monthly cost of a home warranty.
A home warranty can help buyers and sellers move through the real estate process with more certainty. But buyers and sellers should always shop around for a provider with competitive coverage caps, low premiums and comprehensive coverage.
Before buying a home warranty, consider how long the appliances and systems in the home are expected to last. A home warranty might make more sense for items with many years left in their lifespan, which would help save on recurring repair costs over time. It’s also a good idea to get custom quotes from multiple home warranty providers before choosing the right one. Also, check customer reviews and ratings on platforms like Better Business Bureau and Trustpilot.
How Does a Home Warranty Work?
Home warranties are service contracts that cover the repair or replacement of appliances and systems in your home. When something breaks, you call the warranty company and they send a pre-screened technician to your home. If the problem is covered under your plan, they can typically get it fixed right away for a reasonable service fee. Home warranty companies offer a variety of plans, so read the fine print carefully to make sure you have a clear understanding of what is and isn’t included in your coverage.
These warranties and systems protect homeowners, avoid high out-of-pocket expenses and prevent you from draining your emergency savings account to pay for repairs or replacements. But be sure to shop around before choosing a home warranty provider, as premiums, deductibles and exclusions can vary widely. The peace of mind, convenience and financial protection that come with a home warranty can be well worth the cost in the long run.
Arman Ali, respects both business and technology. He enjoys writing about new business and technical developments. He has previously written content for numerous SaaS and IT organizations. He also enjoys reading about emerging technical trends and advances.