How to buy a home warranty

Learn how to protect yourself from high home maintenance costs

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Ever found yourself wincing at the cost of a home repair bill or replacement appliance? With the prices of these goods and services on the rise, footing the bill when such issues arise can be a real headache. This is the sort of frustration that home warranty plans ease.

Offering protection against the high potential costs of home system damage, home warranties offer reduced fees for repair and replacement services in exchange for a relatively small monthly or yearly payment. Also called residential service contracts, home warranty details vary greatly, based on the company providing it along with the home’s age and ownership situation.

Keep reading and learn more about what home warranties are, how they work, how to choose and buy one, and more.

Key insights

  • Home warranties are contracts between warranty providers and homeowners that offer discounted household repair and replacement fees.
  • Details of home warranty coverage vary greatly from one policy to the next.
  • Home warranties differ from home insurance, which generally protects against disaster-related damage to the home rather than routine system and appliance repair.

What is a home warranty?

Home warranties are service agreements between a company and a homeowner that offer the homeowner reduced household maintenance costs. Typically, home warranties cover the repair of damaged electrical systems, heating and cooling systems, plumbing, certain appliances and ductwork.

Some states require all new homes to come with a warranty upon purchase. This protects the homeowner from the cost of repairing unforeseen building defects.

Home warranties don’t typically cover household damage caused by fires, vandalism, or natural disasters. These issues are usually the territory of home insurance policies. Your home warranty provider also likely won’t help with damage in your home caused by misuse, intentional destruction, or failure to perform proper maintenance.

So how do you make a claim on your home warranty policy when something breaks? Providers often have online claim forms to fill out and submit, along with a phone number if you’d rather speak with a person.

Once the claim is filed, the warranty provider will contact its preferred tradesperson, company or appliance manufacturer, depending on the nature of the damage, and get the wheels turning on the repair or replacement.

» LEARN: Home warranty vs. home insurance

How to buy a home warranty

If you think a home warranty makes sense for you, it’s important to make the best buying decision you can. The home warranty industry isn’t free of scammers, so be sure to follow these steps.

» COMPARE: The best home warranty companies

  1. Start by researching reputable warranty providers. “Look for companies with a solid track record, positive customer reviews, and a variety of coverage options,” said housing industry veteran Allia Virtudazo. It's important to understand what specific items are covered under each plan, as these can vary widely.”
  2. Narrow things down to your best few home warranty options, then ask for a sample copy of each policy you’re considering. Read through it carefully to determine exactly what it covers. “Pay close attention to coverage limits, deductibles, and any exclusions listed in the contract,” suggests Virtudazo.
  3. Get in touch with your top choice once you’ve narrowed your options down. Ask the home warranty provider how the claims process works, along with any other questions you have. “Be sure to ask about the cost of the plan, as prices can vary, depending on the level of coverage you choose and the location of your home,” Virtudazo suggests.
  4. Choose a home warranty plan and sign the contract given to you by your new provider and pay the monthly or yearly fee. Be sure you’re clear on exactly when your new coverage starts, since getting this wrong could have serious financial ramifications.
  5. “Keep a copy of the contract for your records, and don't hesitate to contact the provider if you have any questions or need assistance during the coverage period,” Virtudazo recommends. “They should be able to explain the coverage in detail and give you a clear overview of the claims process.”

What does a home warranty cover?

Although home warranty coverage can be very different from one policy to the next, generally home warranties cover repair of most household systems and appliances. Here’s what you should expect a good home warranty policy to cover:

  • Electrical system repairs
  • Indoor plumbing system repairs
  • Heating system repairs (propane or natural gas furnaces, electric space heaters)
  • Ductwork repairs
  • Water heater repairs
  • Dishwasher repairs
  • Air conditioning repairs
  • Kitchen range/oven repairs

Have a feeling you’ll need more household items covered than the above? Many providers offer extra coverage of more non-essential or obscure items such as:

  • Trash compactor repair
  • Roof repair
  • Ice machine repair
  • Television repair or replacement
  • Computer repair
  • Re-keying services (changing the locks)
  • Ceiling fan repair
  • Jacuzzi motor and pump repair

What does a home warranty not cover?

When you’re considering buying a home warranty, it’s just as important to learn exactly what’s not covered in the policy as what is. One major point to keep in mind when shopping for a home warranty is that your policy won’t cover damage caused by fire, theft, weather or other extreme circumstances.

You’re also out of luck if the damage to your home was caused by careless owner error or existed before you signed the contract. Coverage details vary from one warranty provider to the next, but generally speaking, here’s what you can expect your home warranty policy not to cover:

  • Sprinkler repair or replacement
  • Hardware repair or replacement
  • Fridge repair or replacement
  • Garage door opener repair or replacement
  • Spa and pool repair or replacement
  • Wood-burning fireplace repair or replacement

Keep in mind these items aren’t set in stone. In fact, it’s possible to request special coverage on items not usually covered by home warranties, like pools. Check with your prospective warranty provider to see what sort of policy expansions are available for your situation.

Should I buy a home warranty?

It depends. Home warranties can certainly save you money and provide valuable peace of mind, but they don’t make sense for everyone.

If your home and its systems are fairly new, chances are you won’t need to cash in on a home warranty for a while. This means you might fork out a good many years worth of annual fees to your warranty provider before needing their help. Also, newer house systems are often already covered under manufacturer warranties, making a home warranty unnecessary.

The same goes for appliances. If they’re new, they probably still have manufacturer coverage. Home warranties also make somewhat less sense for folks who are diligent in maintaining their home’s appliances and systems and who do most repairs themselves.

Conversely, if most of your home systems and appliances are getting on in years, a good home warranty makes sense. It’s also a great help for those who aren’t DIY inclined and would rather rely on licensed professionals when they need something fixed in the house.

» MORE: Is a home warranty worth it?

Quick and easy. Find a home warranty partner now.


    How do I choose a home warranty provider?

    Research different home warranty providers looking for positive customer reviews. Next, compare policies offered by your top few providers, requesting sample contracts and reading them carefully. Pay close attention to exactly what the policy covers and what it doesn’t, as well as other details in the fine print. When you think you’ve found the ideal home warranty policy, contact the company and ask a representative any other questions you have. Then sign the contract and pay the fee.

    How much does a home warranty cost?

    Home warranty costs vary, depending on the details of your coverage but generally range from $450 to $600 for a full year. Most home warranty policies deal in one-year packages, with more robust coverage options costing as much as $1,400 annually. It’s important to note that paying for a home warranty may not fully get you off the hook when it comes to repair bills. Appliance or system repair service fees can range from $75 to $150 or more, depending on the size and complexity of the appliance.

    Can I buy a home warranty at any time?

    As long as you own a home, you can buy a home warranty anytime. You can also upgrade your coverage anytime, as long as upgrades are offered by your provider.

    Do I need a home inspection before buying a home warranty?

    Probably not, but it’s still a good idea to get one. Many home warranty providers offer coverage without requiring a home inspection first. Trouble is, without a home inspection from a qualified inspector, you might not become aware of hidden preexisting conditions in your home’s systems until something breaks. Chances are, if the damage proves to stem from a pre-existing issue, even if you didn’t know about it, your warranty claim will be denied.

    Are there limitations to coverage?

    Typical home warranties last for a year, but you can request an additional year of coverage. They don’t cover preexisting conditions in your home, generally don’t cover structural or aesthetic repairs, and don’t necessarily cover all appliances.

    Can I cancel a home warranty?

    Most home warranty companies allow you to cancel your policy anytime. You’ll probably need to fill out some paperwork and pay a $25 to $75 cancellation fee, but that’s about it.

    Is a home warranty the same as homeowner's insurance?

    No. Home insurance offsets the cost of household damage from fire, theft, vandalism, or a natural disaster. Home warranties assist with routine repair costs for broken home systems and appliances that break through regular use.

    Bottom line

    If you’re worried about high household repair costs, a home warranty is certainly worth considering.

    “A home warranty can provide homeowners with peace of mind by protecting them from unexpected repair costs,” said Virtudazo, the housing industry expert. “Researching reputable providers, understanding coverage options, and carefully reviewing contract terms will help you make an informed decision when purchasing a home warranty.

    “My experience in the housing industry has taught me the importance of such safeguards to ensure the longevity and financial well-being of your home.”

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