What is a Home Warranty?
A home warranty is a contract that provides customers coverage for repairs and replacements of major household systems and appliances due to normal wear and tear. It offers protection for unexpected breakdowns, including fixing or replacing covered items like air conditioning, stoves, refrigerators, washing machines, and plumbing systems.
How Do Home Warranties Work?
Home warranties help homeowners cover the cost of repairing or replacing appliances, systems, and other home items that break over time. When you purchase a home warranty, it's like having a security blanket for unexpected repairs. If something goes wrong with covered items, the appliance warranty company pays for repairs or replacements up to your plan's limit.
Should you have a problem with a covered item, you can call the warranty company and they'll send a technician to fix it. The technician will use parts from an approved list to repair or replace the item so that it works again.
You usually need to pay a small service fee or deductible for each repair or replacement job. Your plan will cover the rest of the bill up to your policy amount. This is why many people view home warranties as a worthwhile investment—you pay little to nothing if something breaks.
Are Home Warranty Plans Worth It?
Home warranty plans are worth it for most homeowners. They protect you from the steep fees of unforeseen repairs and replacements, especially for major appliances such as fridges or washing machines.
There are many reasons to get a home warranty plan, including peace of mind, and knowing that if something breaks down in your house, you may not have to pay as much to get it fixed. Many companies also offer extra coverage options, like for pools, spas, additional appliances, or systems, so you can customize your plan depending on your needs.
Determining the Need for a Home Warranty
A home warranty can be beneficial in many situations, whether you're moving into a new house or one that's been well-loved for decades. For those moving into a newly built house, a warranty provides coverage against defects and malfunctions in the home's major systems and appliances. It may even reduce total maintenance costs in the first year.
Getting coverage on an older house is also a good idea as it guards against expensive repairs due to aging and wear and tear. While most plans don't cover existing issues in older homes, there are a few home warranties that cover pre-existing conditions—allowing repair services to be done at a reduced rate or no cost at all.
How to Choose the Best Home Warranty Plan for Your Needs
When you're ready to purchase a home warranty plan, follow these steps to ensure you choose the best company for your needs.
- Research different plans and compare features: Read up on the various home warranty contracts available to determine which best meets your needs. Consider coverage limits, service fees, and other benefits each plan offers.
- Ask important questions: Reach out to home warranty companies to ask them any questions you have about their plans. Ensure you understand what's covered and if any restrictions or limitations apply.
- Get home warranty quotes from multiple providers: When you're ready to make a purchase, compare prices and ask for quotes from several providers. Make sure to read the contract's fine print before making a decision.
- Check for credentials: Look for companies certified by organizations such as the National Home Service Contract Association to ensure they're reputable and have proper licenses and regulations.
- Examine customer reviews: Read home warranty reviews from customers who've used the company before. Check how reliable, helpful, and responsive their customer service is, so you know how to submit a claim or repair request in the future.
Coverage Details of Home Warranty Plans
Basic home warranty plans generally include major appliances, offering coverage for:
- Refrigerators
- Dishwashers
- Washing machines
- Dryers
- Ovens and cooktops
- Garbage disposals
In addition, most home warranties cover these essential home systems:
- Electrical system
- Ducts
- Water heater
- Air conditioner
- Cooling and heating system
- Furnace
- Plumbing system
- Garage door
At an extra cost, many home warranties offer add-on coverage for the following items:
- Septic tanks
- In-ground pools
- Well pumps
- Sump pumps
- Septic systems
- Central vacuums
- Spas
- Water heaters
Cost Considerations for Home Warranty Plans
Home warranty plans usually cost between $300 and $600 annually, which comes down to $25 to $50 per month. Some companies offer monthly payment options but pay annually if you can, as many providers give discounts for this.
In addition, most home warranty companies charge a flat service fee or deductible each time a technician visits. This can cost anywhere between $60 and $150. There may also be fees for after-hours repairs, specific types of services, and other items not included in your plan. Read over your plan's terms and conditions to exactly understand its associated fees.
Advantages of Purchasing a Home Warranty
An additional layer of insurance for your home, home warranties can offset costly repairs or help fund replacements on major appliances and other items in your house. With a home warranty plan, you can preempt surprise expenses and enjoy peace of mind knowing that any issues under warranty will be taken care of.
Benefits for Homeowners and Landlords with a Home Warranty Policy
Homeowners and landlords can benefit from home warranty policies, as they cover the cost of repairs and replacements on major appliances and systems that will eventually break down. This is especially useful for landlords, who depend on rental income to pay bills and keep up with maintenance costs. With a home warranty plan, they don't have to worry about additional out-of-pocket repair costs.
Homeowners also benefit from knowing that if something goes wrong, they won't have to scramble to come up with the money or find a contractor to fix it. Customizable coverage options are available from most companies, letting homeowners choose the specific items they need protection for.
What Types of Home Warranty Plans Are Available?
Home warranty programs are a helpful way to protect yourself from expensive repairs. There are several types of home warranties out there, so it's crucial to understand each plan's coverage. Here's a breakdown of the different types of plans and what they cover:
- Appliance-only plans: Major home appliances such as cooktops, garbage disposals, refrigerators, and ovens.
- Systems-only plans: Home systems, such as plumbing, electrical, and HVAC.
- Comprehensive plans: Both major appliances and home systems.
- Add-on coverage: Items not included in your base plan, such as pools, spas, second refrigerators, septic tanks, sump pumps, and well pumps.
No matter what type of home warranty plan you choose, always read the fine print and ask questions before committing. That way, you can rest assured that the investment in your home is properly protected.
What Is Not Covered Under Warranty?
While home warranty plans provide homeowners with valuable protection, they may not cover everything. You often need a higher-tier plan or specific add-on to get some things covered. Here are a few items and situations that typically aren't covered under most warranties:
- Breakdowns due to improper maintenance: You'll have to pay for damages or malfunctions caused by improper maintenance or a lack of upkeep. For example, if you don’t change the filters in your HVAC system regularly, any resulting issues won’t be covered.
- Damage due to DIY repairs: Repair or replacement costs won’t be covered if you attempt to fix an item yourself, causing further damage. That’s why you should always call a professional if you think something is wrong.
- Pre-existing damage: Warranties won't cover damage that occurs before the start date of your policy.
- Cosmetic issues: Cosmetic issues, such as a scratched countertop or chipped wall paint, are considered minor repairs and aren’t part of standard warranties.
- Code violations: Your home warranty policy won't cover damages associated with code violations, like if you build a home addition without getting the proper permits.
Step-by-Step Guide to the Home Warranty Claims Process
Filing a claim with your home warranty company doesn’t need to be overwhelming or complicated. You can follow the process below to get your issues sorted quickly.
Step 1: Contact Your Home Warranty Company
Contact your home warranty company online, via phone, or by email. Give them all the relevant details regarding your issue, such as when the problem first occurred, what happened, and what may have caused it. You may also be asked for photos or proof of purchase, depending on the company’s policies.
Step 2: Submit an Online Claim Form (If Required)
Some companies offer an online claim form that you must fill out before they accept your claim. It helps the company understand your problem more clearly and can ultimately streamline the process for both parties. When completing the form, read through each field carefully before submitting it, to ensure the information is complete and accurate.
Step 3: Await Confirmation of Your Claim
Once you've submitted your claim, you must wait for confirmation that it's been accepted. Many companies aim to respond within 24 hours, but this can vary depending on the severity of the issue. Follow up if there's no response within a day or two—sometimes, emails get lost.
Step 4: Check If You Need to Pay Service Fees
Before any repairs begin, you'll likely need to pay a service fee. Your home warranty company should give clear instructions on how and when to make this payment. Ask questions so you can avoid any misunderstandings down the line, and certainly before the technician arrives at your door.
Step 5: Arrange for Repair or Replacement of the Item
After your claim is accepted, repair or replacement will begin. Depending on where you live and the availability of parts and services in your area, this can take anywhere from a few days to several weeks. Most companies have a panel of contractors they work with locally, but they're not always reliable or communicative. Make sure to ask for updates throughout the process.
Home Warranty vs. Homeowners' Insurance: Understanding the Difference
Homeowners' insurance covers the repair cost associated with fires, floods, lightning strikes, windstorms, hail, theft, vandalism, and liability protection (if someone is injured on your property). Specific items covered can include roofs, furniture, clothing, appliances, and more—as long as the damage is due to an issue or natural event covered in the plan.
Home warranties commonly cover the repair or replacement of major household fixtures and systems, such as the HVAC, plumbing, and electrical wiring due to normal wear and tear. A home warranty may also cover major appliances such as dishwashers, stoves, ovens, and refrigerators for similar reasons.
Both protect your home's value, so it's essential to do a home warranty vs. homeowners' insurance comparison when making a decision.
Additional Home Warranty Companies We Reviewed
In addition to the top home warranty companies outlined above, the following are also worth considering:
- Sears Home Warranty - Best repair guarantee
- HSA Home Warranty - Best for no home inspection
- Landmark Home Warranty - Best pest control coverage
- HomeServe USA - Best budget-friendly packages
- Amazon Home Warranty - Best for a free month of service
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Bottom Line - Protect Your Investment with a Home Warranty
Our picks for the top 10 best home warranty companies are Choice Home Warranty, Select Home Warranty, American Home Shield, Home Warranty of America, First American Home Warranty, Home Service Club, ARW Home, Liberty Home Guard, First Premier and 2-10 Home Buyers Warranty.
Home warranties can help homeowners and landlords save money on appliance and home system maintenance.
Some plans give you access to extra perks like extended appliance protection, free HVAC maintenance, and a network of vetted and certified technicians you can trust. These perks alone make home warranties a good investment for many homeowners.
Costs vary depending on the company you choose, coverage level, number of add-ons, and size of your home. The average price of a basic home warranty plan is usually between $300 and $600 per year, which breaks down to $25 to $50 per month. In addition, factor in the cost of making service claims, which amounts to roughly $60 to $100 per claim.
Both buyers and sellers can pay for home warranty services. However, it's typical for sellers to throw in a one-year home warranty contract to make their home more appealing to potential buyers.
Most home warranties typically last one year, though some companies offer multi-year plans.
Most home warranties don't cover roof repairs. However, you can add roof leak coverage if you go with a provider like American Home Shield or Select Home Warranty.
A home warranty when selling a house is a service contract that covers repairs and replacements of major system components and built-in appliances, such as HVAC systems, water heaters, and kitchen appliances. This gives peace of mind to both the buyer and seller and can help catch anything overlooked during an inspection.
Home insurance, also called homeowner's insurance, differs from a home warranty. Home insurance rates vary widely by state and home size, but you can expect to pay anywhere from $450 to $4,000 per year, per home. On average, Americans spend about $1,700 per year on this expense.
Homeowners looking for HVAC coverage should consider Choice Home Warranty and Select Home Warranty. Both provide comprehensive protection plans that cover your HVAC system, appliances, and major systems. Choice Home Warranty includes HVAC coverage in its basic plan, while Select Home Warranty requires you to sign up for its Gold plan to get the same.
Homeowners' insurance and home warranties are two different types of coverage that protect homeowners in different ways: Homeowners' insurance protects your property from damage caused by natural disasters, fire, theft, and more. It covers the cost of repairing or replacing your home and personal belongings while providing liability protection if someone is injured on your property. Home warranties cover repairs and replacements of major system components and built-in appliances. They're meant to protect homeowners from unexpected breakdowns and repairs not typically covered by homeowners' insurance. Both types of coverage are valuable and provide different types of protection for your home.
