What Is a Home Warranty and Why Do Homeowners Need One?

A home warranty is a service contract that covers the repair or replacement of major home systems and appliances due to normal wear and tear. By paying a fixed monthly or annual fee, homeowners can avoid unexpected repair bills. Instead of paying out of pocket, a small service fee is paid when a technician arrives to handle the problem, which can include everything from fixing a broken furnace to replacing an oven.

Understanding Home Warranties

• Definition: A home warranty is a contract between a homeowner and a warranty company that provides discounted repair and replacement services on a home's major components
• Coverage: Typically includes HVAC, plumbing, electrical systems, and major appliances like refrigerators and ovens
• Service Fees: When a covered item breaks down, the homeowner pays a service fee, usually between $50 and $150, and the warranty company arranges for a technician to fix the issue

Why Homeowners Need a Home Warranty

• Financial Protection: Unexpected repairs can be costly. A home warranty helps manage these expenses by covering significant portions of repair or replacement costs
• Convenience: The warranty company handles finding and scheduling qualified service technicians, saving homeowners time and effort
• Peace of Mind: Knowing that major systems and appliances are covered provides reassurance, especially for first-time homeowners or those with older homes

Home Warranty Costs

• Annual Premiums: Home warranty plans typically cost between $300 and $600 per year for a basic plan, with more comprehensive plans ranging up to $1,200 annually
• Monthly Payments: Monthly costs can range from $25 to $100, depending on the level of coverage and the provider
• Service Call Fees: A fee is charged each time a service technician is dispatched, usually between $50 and $150

Common Coverage Options

Home Systems:

• HVAC (Heating, Ventilation, and Air Conditioning)
• Plumbing
• Electrical
• Water Heaters
• Ductwork

Home Appliances:

• Refrigerators
• Ovens and Cooktops
• Dishwashers
• Microwaves
• Washers and Dryers

Optional Add-Ons:

• Swimming Pools and Spas
• Septic Systems
• Well Pumps
• Roof Leak Repairs
• Additional Refrigerators

Limitations and Exclusions

• Pre-Existing Conditions: Issues that existed before the warranty coverage began are typically not covered
• Improper Maintenance: Failures due to lack of maintenance or improper installation may be excluded
• Specific Exclusions: Certain items, like outdoor structures, cosmetic defects, or non-essential components, may not be covered

Filing a Claim

• Identify the Issue: Determine if the problem is with a covered item
• Contact Provider: Submit a claim online or via phone
• Pay Service Fee: Pay the agreed-upon service fee
• Service Technician Visit: A technician assesses and repairs or replaces the item

Choosing the Right Home Warranty Provider

• Research: Read reviews and compare ratings of various home warranty companies
• Coverage Options: Ensure the provider offers plans that cover the systems and appliances in your home
• Cost Comparison: Compare premiums and service fees across different providers
• Customer Service: Consider the provider's reputation for handling claims efficiently

Key Questions to Ask Providers

• What is included and excluded in the coverage?
• Are there any coverage limits or caps?
• What is the process for filing a claim?
• How quickly are service requests handled?
• Can I choose my own service technician?