What Is a Home Warranty and Why Might You 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. Unlike homeowners insurance, which covers damage from events like fires or storms, a home warranty focuses on the functionality of systems like HVAC, plumbing, and electrical, as well as appliances such as refrigerators and ovens. By paying a monthly or annual premium, homeowners can mitigate unexpected repair costs, ensuring peace of mind and financial predictability.

Understanding Home Warranty Coverage

What Does a Home Warranty Typically Cover?

• Home Systems: HVAC, electrical, plumbing, water heaters, and ductwork
• Appliances: Refrigerators, ovens, dishwashers, washers, dryers, and built-in microwaves
• Optional Add-Ons: Swimming pools, septic systems, well pumps, additional refrigerators, or stand-alone freezers

Coverage varies by provider, so always review contract details to understand coverage limitations and exclusions.

Do I Need a Home Warranty If I Have Home Insurance?

Yes, because they serve different purposes and complement each other. Home insurance covers structural damage or losses caused by events like fires, theft, storms, or vandalism. In contrast, a home warranty focuses on everyday appliance breakdowns or failures of essential systems like HVAC, plumbing, or electrical wiring due to normal wear and tear.

By combining both, homeowners benefit from a more comprehensive protection plan. Insurance guards your property from disasters, while a home warranty helps you avoid out-of-pocket repair bills from regular system and appliance malfunctions.

Home Warranty vs. Homeowners Insurance

A home warranty provides financial coverage for repairs or replacements of key appliances and systems due to regular usage over time. It typically includes things like central air conditioning, water heaters, refrigerators, and washers.

Homeowners insurance, on the other hand, protects the physical structure of your home and its contents from unforeseen hazards like fire, theft, windstorms, or liability claims. It's often required by mortgage lenders and comes with higher premiums than a home warranty.

While a home warranty is optional, it acts as a helpful complement to homeowners' insurance, ensuring coverage for common breakdowns not caused by disasters. Together, they provide a safety net for both catastrophic events and routine failures.

Financial Considerations

Home warranty plans generally cost between $300 and $600 per year, with monthly options ranging from $25 to $50. Most providers also charge a service call fee—typically $50 to $150—each time a technician visits.

These costs are predictable and often significantly lower than out-of-pocket repair or replacement costs. For homeowners with older appliances or HVAC systems, a warranty can offer substantial savings, especially for high-cost repairs like furnace or AC unit replacements.

Choosing the Right Home Warranty Provider

To select a reliable home warranty provider, focus on the following:

• Coverage Flexibility: Does the company allow customisation to cover your specific systems and add-ons like swimming pools or septic tanks?
• Service Reliability: Are certified technicians dispatched quickly? Does the provider have 24/7 customer service?
• Transparency: Does the contract clearly state what’s covered, the claim process, and exclusions?

Key Questions to Ask Before You Sign:

1. What are the average monthly and annual costs for plans?
2. How much is the service call (trade fee) per claim?
3. Are there any exclusions or waiting periods before coverage begins?
4. Does the plan cover pre-existing issues or only new breakdowns?
5. Can I add optional features like water line insurance or pool coverage?
6. How does the claim and repair process work?
7. What do verified customer reviews say about support and response time?
8. Are there coverage caps on individual systems or appliances?