Is a home warranty required?
It isn’t required, but you still may want one
Home warranties help cover the costs of repairs and replacements for various systems and appliances. Unlike homeowners insurance, which covers loss or damage to a disaster or theft, home warranties cover breakdowns due to everyday wear and tear. Since home warranties usually cost hundreds of dollars per coverage term, it’s important to know what they cover and if they are required.
Most people are not required to have a home warranty.
Jump to insightHomebuyers and sellers can benefit from a home warranty.
Jump to insightMost home warranties can be purchased at a monthly or annual rate.
Jump to insightWhat does a home warranty cover?
Home warranties typically cover a wide range of systems and appliances and can be paid for at a monthly or annual rate. This coverage includes repairs and replacements for household appliances such as dishwashers and ovens and systems such as HVAC, plumbing and electrical.
Home warranty companies usually offer multiple plans. For example, most companies provide an appliance plan, a systems plan and a comprehensive plan that combines both. Many home companies also have add-on options. This allows you to add more covered items for additional fees.
Here are some items that are commonly covered by a home warranty:
- Ovens/ranges/cooktop
- Dishwasher
- Trash compactor
- Refrigerator
- Garbage disposal
- Washer and dryer
- Built-in microwave
- Garage door opener
- Ceiling fan
- Attic, kitchen and bathroom exhaust fan
- Central vacuum system
- Electrical system
- Plumbing
- Heating and cooling system
- HVAC
- Water heater
Is a home warranty necessary?
Home warranties can be extremely helpful with repair costs and replacements; however, they are not required when moving into a new home.
However, a home warranty may be worth the cost even if it isn’t required. A home warranty may be a good idea if you are buying or currently live in an older home. It helps with the cost of repairs and replacements so you don't have to pay a significant amount out of pocket. For example, if your oven breaks down and costs $500 to fix and you have a home warranty, you would only be responsible for paying a service call fee, and the company would cover the repair cost. If you have older appliances and systems, a home warranty can help you save a lot of money.
However, it is important to remember that most plans have coverage caps, meaning the companies will only pay up to a certain amount for repairs and replacements, and then you are responsible for the rest. For instance, if it costs $1,200 to repair your refrigerator but the coverage cap is $1,000, you would be responsible for paying the remaining $200.
Should I get a home warranty?
A home warranty is a good idea if:
- You have an older home with appliances that are more likely to malfunction.
- You don’t want to pay out of pocket after breakdowns of household appliances and systems; home warranties help with the cost of repair and replacement.
- You are buying a home and you’re not sure if the appliances and systems that come with the home are in good condition.
- You’re selling your home — a home warranty may make it more appealing to buyers.
FAQ
How does a home warranty work?
A home warranty is a service contract that helps cover the costs of repairs and replacements on your systems or appliances when they break down from everyday use. Depending on your plan, you will usually pay a monthly or annual fee for coverage, plus a service fee when you file a claim.
Is a home inspection required to purchase a home warranty?
Usually, an inspection isn’t required. Still, you might choose to have one to establish there are no preexisting conditions with covered items that could result in denied claims.
How much is a home warranty?
Most home warranty plans cost around $40 to $60 a month or $450 to $600 a year. Each time you file a claim, you will need to pay a service call fee of around $75 to $150.
Bottom line
While home warranties are not a requirement, they may be worth the cost. Home warranties cover the costs of repairs and replacements of various systems and appliances. They are beneficial for homebuyers or sellers — particularly people with older homes. Check out our picks for the best home warranties to find the best coverage for you.
