Does a home warranty cover preexisting conditions?

What is a preexisting condition?

In the context of home warranties, a preexisting condition is any problem, defect or damage that existed in your home’s appliances or systems before your warranty coverage took effect. In other words, it’s anything that was wrong with an item before you signed the warranty contract.

Some common preexisting conditions include faulty HVAC systems, plumbing leaks, electrical issues, appliance malfunctions and water heater defects. While these are common issues covered by a home warranty, a provider may not pay for repairs if the issue occurred before you signed a contract and the issue was easily detectable by a technician or you knew about it.

The best way to know if an item has a preexisting condition is to schedule a home inspection before signing up for coverage. A licensed inspector will check for damage and test that each appliance and system is functioning properly. You’ll receive a detailed report that outlines any repairs the inspector recommends.

Keep in mind that most warranty providers don’t require this inspection to sign up for a policy. But it’s in a homeowner’s best interest to have an accurate account of each covered item and its maintenance records. Otherwise, your provider may deny a claim and leave you with the repair bill.

» LEARN: What is a home warranty?

What do home warranties usually cover?

Home warranties offer homeowners helpful cost coverage for the replacement or repair of major appliances and systems damaged by everyday wear and tear. Coverage details vary, but most plans typically include:

• Electrical, HVAC and plumbing systems
• Kitchen appliances
• Laundry appliances
• Ceiling and exhaust fans
• Garage door openers
• Water heaters

Many providers also have add-on coverage for items such as swimming pools, spa equipment, well pumps, roof leaks, stand-alone freezers and central vacuums, to name a few. This specialty coverage often comes a la carte for a few extra dollars per item per month. This allows homeowners to tailor their coverage to their needs.

When a covered item breaks down, you must file a claim with the provider by phone or online. Once the claim is approved, you’ll pay a service fee (typically $75 to $125) and the provider dispatches a qualified technician to either repair or replace the item.

While the process itself is straightforward, your contract will outline the terms and conditions of the policy, and there are often many exclusions or coverage limits to be aware of. So, it’s important you understand exactly what the plan covers and get clarification from the provider before signing up.

» MORE: What does a home warranty cover?

Do home warranties cover preexisting conditions?

Home warranty providers usually deal with preexisting conditions conservatively. More often than not, they deny coverage for issues that were shown to exist before the homeowner’s policy took effect. This is why companies have a 30-day waiting period before coverage begins: It reduces the chance a homeowner can file a claim with a preexisting condition.

Preexisting conditions fall into two categories:

• Known preexisting conditions are issues the homeowner knew existed before getting coverage and did not rectify. These also include defects that would have been easy for an inspector to notice either visually or with a simple test during an inspection, such as a leaking pipe.
• Unknown preexisting conditions are defects that are not obvious during a visual inspection or ones an inspector cannot easily identify. You wouldn't know about them until the system or appliance breaks down.

While several home warranty providers tout preexisting coverage, they’re referring only to unknown conditions. If a provider determines that a defect is a known preexisting condition, the homeowner’s claim will be denied. This applies whether or not the item in question would normally be covered by the policy.

If a homeowner doesn’t have an inspection done before signing up for coverage or doesn’t have copies of recent maintenance records, it can be tricky to prove the condition was unknown. A technician hired by the provider can claim the issue would have been detectable, and you’ll be stuck paying full price for the repair.

The best strategy for homeowners looking to minimize claim disputes is to pay for a home warranty inspection. If this inspection is done by a licensed professional before the warranty coverage begins, there’s a higher chance the provider will honor the homeowner’s claims. A home warranty inspection typically costs between $200 and $500.

Ultimately, it’s the homeowner’s responsibility to disclose everything they know about the state of all covered items.

What should you do if your items have preexisting conditions?

If you haven’t signed up for a home warranty yet and an inspection uncovers a preexisting condition, you should get the item fixed before signing up. If you’re in the process of buying a new house, you can often negotiate for a lower price or ask the seller to repair or replace the item. Keep all records related to the repair in case you need to show them to the provider and prove you rectified the situation.

Alternatively, you can always exclude any items from the home warranty plan, which may lessen the overall cost of the policy.

If you already have a home warranty plan and you’ve filed a claim, a repair technician will inspect the item and determine if the condition counts as a known or unknown condition. Known preexisting conditions usually include visible rust, cracks or missing parts. If this is the case, the provider will likely deny the claim, and you’ll have to pay for the repair out of pocket.

Alternative options for preexisting condition coverage

Home warranty providers sometimes offer specialized coverage add-ons to help homeowners deal with preexisting conditions. These often take the form of custom-tailored extended policies that include coverage for known preexisting issues. The downside is that these benefits come with extra costs.

If you’re concerned about preexisting issues, add-ons like these are worth discussing with your provider since they could save you money in the long run. Otherwise, you’ll need to pay out of pocket for any related repairs or replacements.

Bottom line

Home warranties provide homeowners with partial or complete cost coverage for many home systems and appliances. However, issues that predate a home warranty’s coverage period (known as preexisting issues) aren’t usually covered by the policy.

Whether you’re a current homeowner or in the middle of the buying process, it’s best to get an inspection, which can uncover any preexisting conditions. Otherwise, you open yourself up to the possibility of disputes with your provider and may not get coverage when you need it.

Also, carefully read all terms and conditions when considering a home warranty, and ask your provider whether exceptions can be made when it comes to preexisting condition coverage.