Homeownership comes with many responsibilities, one of which is maintaining the various systems and appliances in the house. While regular maintenance can help prolong the life of these items, unexpected breakdowns and repairs can still occur.
A home warranty can provide added peace of mind for homeowners by covering the cost of repairs or replacements for certain appliances and systems. In this article, we will explore the basics of home warranties, including what they cover, how they work, and what to consider when choosing a plan.
What Is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of major home systems and appliances. Unlike homeowners insurance, which primarily covers damage from unforeseen events like fire or theft, a home warranty focuses on the wear and tear of everyday systems.
How Does It Work?
- Purchase: Homeowners can buy a home warranty at any time, often when buying a new home or when the existing warranty expires.
- Service Request: When a covered system or appliance breaks down, you contact the warranty provider.
- Service Provider: The warranty company arranges for a service provider to assess and repair the issue.
- Cost: You pay a service fee (typically $75 – $125) per claim, and the warranty covers the rest.
Advantages of a Home Warranty
- Cost Savings
Home repairs can be expensive. A home warranty can save you money by covering repair or replacement costs, reducing unexpected expenses.
- Convenience
With a home warranty, you only need to make one call when something goes wrong. The warranty provider coordinates the rest, simplifying the repair process.
- Peace of Mind
Knowing that your major systems and appliances are protected provides peace of mind, especially for new homeowners.
- Predictable Budgeting
A home warranty helps you budget for home maintenance, as you’ll know your annual premium and service fees.
Disadvantages of a Home Warranty
- Limited Coverage
Home warranties don’t cover everything. They often exclude pre-existing conditions, cosmetic damage, and certain systems or appliances.
- Service Providers
The quality of service providers may vary, and you may not have control over who is sent to repair your home.
- Annual Premiums
You must pay an annual premium, even if you don’t use the warranty, which could potentially outweigh the savings.
What’s Typically Covered?
| Covered Systems | Covered Appliances |
|---|---|
| HVAC | Refrigerator |
| Plumbing | Oven/Range |
| Electrical | Dishwasher |
| Water Heater | Washer/Dryer |
| Garage Door Opener | Built-in Microwave |
| Ceiling Fans | Disposal |
