Find the best home warranty
See House Method reviews on the best home warranties availableFind a Home Warranty
When a major system or appliance breaks down in your home, you could be stuck paying exorbitant repair costs—unless you have a home warranty. Below, we’ll discuss what’s commonly covered under a home warranty, how it works, and how to choose the best policy for you and your home.
A home warranty, also known as a home service agreement, is a one-year contract with a warranty company that helps cover the cost of repairs or replacements for major home systems and appliances that fail due to normal wear and tear.
Unlike homeowners insurance, which covers property damage from natural disasters and burglaries, a home warranty covers broken systems and appliances, like your HVAC system or garbage disposal. However, 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.
Note that some plans will allow you to purchase optional coverage for items like your swimming pool, spa, or home entertainment system at an additional price.
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.
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 a certain dollar amount, 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 is 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.
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.
If one of your home systems or appliances fail, call your home warranty company as soon as possible. Here’s what you can expect when you need a repair or replacement:
A basic home warranty will cost around $300 per year while more comprehensive plans could cost as much as $800 per year. Your home warranty company may provide the option of paying the cost in monthly increments, but most companies will require you to pay in full after signing a contract.
The actual cost of a home warranty plan will depend on where you live, the coverage you choose, and the warranty company you buy from. Your warranty company may offer special discounts on policy prices or provide more coverage at a lower price, but these one-time deals are generally offered when you purchase a home.
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. Don’t be afraid to ask a home warranty company to speak to a client that’s filed a claim and get advice from friends and family who have warranties with the company.
Learn the most important considerations and read what realtors have to say about purchasing a home warranty.
Be prepared in the event that a major system or appliance breaks down by securing a home warranty. Learn how a home warranty works and how to choose the best policy.
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