Home Warranty Coverage - 2020 Plans and Pricing

By Kealia Reynolds | Advertiser Disclosure

When a major system or appliance breaks down in your home, you could be stuck paying exorbitant repair costs—unless you have home warranty coverage. Below, we’ll discuss what’s commonly covered under a home warranty, how one works, and how to choose the best home warranty policy for you and your home.

What is a home warranty?

First things first—what exactly is a home warranty? A home warranty is a service contract that covers the cost to repair or replace major home systems and appliances when they break over time due to normal wear and tear. Having this home appliance insurance can provide peace of mind and prevent you from paying exorbitant out-of-pocket costs.

What does a home warranty cover?

A home warranty, also known as a home protection plan, typically covers major systems and appliances in your home, like your HVAC system, plumbing, refrigerator, or garbage disposal. Most companies offer two to four coverage options—an appliance plan, systems plan, combo plan, and build-your-own-plan—for customers.

An appliance-only plan covers all major appliances in the home and is the best home warranty option for those who have old home appliances and relatively new systems already covered under an extended warranty. A systems-only plan covers all major systems in the home and is the best type of home warranty for those who have old home systems but fairly new appliances that are still covered under a manufacturer’s warranty.

Below is what coverage looks like under these different plans.

Appliance coverage vs. system coverage

Appliance Plan Systems Plan
Refrigerator Air conditioning system
Dishwasher Heating system
Built-in microwave Electrical system
Clothes washer Plumbing system
Clothes dryer Ductwork
Oven/Stove/Range Water heater
Garage door opener Garbage disposal
Trash compactor Instant water dispenser
Freestanding ice maker Smoke detectors
Built-in food center Telephone wiring
Central vacuum
Ceiling fans
Doorbell

In addition to these types of home warranty plans, some companies will also provide a basic plan or combination plan. A basic plan will cover general home items, like the refrigerator and electrical systems, while a combination plan will offer slightly more comprehensive coverage and protect all major systems and appliances, including your air conditioning systems, washer and dryer, and water heater.

Note: Certain appliances may not be covered depending on where you live and the coverage you have. Make sure you read your sample contract thoroughly to know what is and isn’t covered under your policy.

Home warranty optional add-ons

The best home warranty providers allow customers to customize their plans and add on protection for certain items at an additional cost. Some of the more popular add-ons are listed below:

  • Pool and spa equipment
  • Hot tub
  • Well pump
  • Septic pump
  • Standalone freezer
  • Additional appliances, like a second refrigerator or second microwave
  • Roof leaks
  • Pre-season HVAC tune-up
  • Pest control services
  • Guest unit
  • Electronics

What’s not covered under a home warranty

Not all items are covered under a home warranty. Here are a few items that will need additional coverage separate from a home protection plan:

  • Items that are broken prior to closing
  • Items that were improperly installed or maintained
  • Exclusions noted in the home warranty policy
  • Theft
  • Natural disasters
  • Fire
  • Utility emergencies
  • Structural damage from severe weather

Limits and exclusions on home warranty coverage

Sometimes, home warranties will have limits on systems set at a dollar amount. For example, a home warranty company may cover a repair on your dishwasher up to $500, leaving you to pay for the remaining repair expenses. Your contract will stipulate how much your warranty company will pay for repairs and replacements and if there’s a cap on how much they will pay.

Additionally, your service contract could include exclusions for systems or appliances that fail due to improper maintenance. Home warranty companies will pay only for repairs and replacements that happen due to normal wear and tear. As long as the system or appliance in question has received continuous maintenance and was in working order when the house was bought, your home warranty should cover the repair or replacement.

Before signing a home warranty contract, make sure that you understand what is and isn’t covered. Some repairs may not be made or paid for if there is evidence of improper maintenance, code violations, unusual wear and tear, or improper installation.

Ask your real estate agent about getting a home inspection before purchasing a warranty to determine any pre-existing conditions that a system or appliance might have. These “known conditions” could be included as an exclusion in your contract, so it’s a good idea to address these issues before securing a home warranty.

Remember: Certain appliances may not be covered depending on where you live and the coverage you have. Make sure you read your service contract thoroughly to know what is and isn’t covered under your policy.

Certain appliances may not be covered depending on where you live and the coverage you have. Make sure you read your service contract thoroughly to know what is and isn’t covered under your policy.

Frequently asked questions about home warranty coverage

Who needs home warranty coverage?

A home warranty can benefit just about anyone, from first-time homeowners and home sellers to real estate agents and rental property owners.

What’s the difference between a home warranty and homeowners insurance?

Unlike homeowners insurance, which covers property damage from natural disasters and burglaries and protects you if someone gets injured on your property, a home warranty will cover most major components of large home systems and appliances that break down due to normal wear and tear. Additionally, homeowners insurance is usually required by your mortgage lender whereas a home warranty is optional.

How much does a home warranty cost?

The average home warranty cost is between $25–$67 a month, however you might be able to save more money by enrolling in a multi-year plan. In addition to paying a monthly premium, you’ll typically have to pay a service fee, or deductible, of $75–$125 for every service visit.

How can I request service?

Most home warranty companies allow you to file a claim online or by calling a customer service number.

How does a home warranty work?

After requesting service for your covered items, your home warranty provider will put you in contact with a licensed, approved technician or let you choose your own contractor for repairs. The contractor will come out to your house, at which time you’ll pay them a service fee. After diagnosing the issue, the contractor will recommend a repair or replacement.

In most cases, the repair can be done that same day. If a replacement is needed, you might have to schedule a follow-up appointment for the contractor to come back and install the new appliance or system.

When do I buy a home warranty?

Most people choose to buy a home warranty when they’re buying their first home, but in reality, you can opt into protection at any time during homeownership. If you’re selling a home, you may want to buy a home warranty to make your home more attractive to buyers.

How long does a home warranty last?

Most home warranties will last for 12 months and may be renewed annually.

Which company has the best home warranty coverage?

There are a variety of home warranty companies that provide different levels of coverage at different prices. Here are some of the best home warranty providers in the business.

Name

Choice Home Warranty

Description

Superlative: Editor's Choice
Plans: 2 plans + optional add-ons
BBB rating: B-
Availability: 47 states
Premiums: $36–$44 per month
Service fee: $85

Score
8 / 10
Name

American Home Shield

Description

Superlative: Best customizable plans
Plans: 4 plans + optional add-ons
BBB rating: B
Availability: All states except Alaska
Premiums: $50–$60 per month
Service fee: $75–$125

Score
9 / 10
Name

Select Home Warranty

Description

Superlative: Most cost-effective plans
Plans: 3 plans + optional add-ons
BBB rating: B
Availability: 46 states
Premiums: $36–$38 per month
Service fee: $75

Score
8 / 10
Name

America's 1st Choice Home Club

Description

Superlative: Best workmanship guarantee
Plans: 4 plans + optional add-ons
BBB rating: B
Availability: All states except HI, CA, SC, and NV
Premiums: $38–$50 per month
Service fee: $75–$125

Score
8 / 10
Name

First American Home Warranty

Description

Superlative: Best HVAC coverage
Plans: 2 plans + optional add-ons
BBB rating: B+
Availability: 35 states
Premiums: $28–$43 per month
Service fee: $75

Score
7 / 10
Name

The Home Service Club

Description

Superlative: Best for immediate coverage
Plans: 2 plans + optional add-ons
BBB rating: N/A
Availability: All states except Wisconsin
Premiums: $46–$61 per month
Service fee: $95

Score
9 / 10

Final thoughts

Before purchasing a home warranty, do your research and check out consumer reviews and third-party sites to compare plans and get a sense of customer satisfaction, pricing, limitations, exclusions, home warranty features, and more. At House Method, we pride ourselves on delivering the utmost trust and transparency to our readers. That’s why we took the time to create an objective rating system and score each home warranty provider according to that methodology.

Whenever you read one of home warranty reviews, you can rest assured that the information put forth is straight from customer service representatives at the home warranty company and that the overall home warranty rating is based on a weighted, 100-point scale that scores companies on plans offered, coverage, state availability, cost, trustworthiness, customer service, and unique benefits.

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