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 policy for you and your home.
A home warranty, also known as a home protection plan, typically covers major systems and appliances in your home, like your HVAC system or garbage disposal, that have broken down due to normal wear and tear.
Here are some common items covered under a home warranty:
Note: Certain appliances may not be covered depending on where you live and the coverage you have. However, some home warranty plans will allow you to purchase optional coverage for items like your swimming pool, spa, or home entertainment system at an additional price. Make sure you read your service contract thoroughly to know what is and isn’t covered under your policy.
Most home warranty providers will offer three levels of coverage: basic, comprehensive, and a la carte. Compare the types of home warranty coverage below.
Under a basic home warranty plan, the following items are typically covered:
A comprehensive home warranty will include everything covered under a basic plan plus some additional items, such as:
The best home warranty providers allow customers to customize their plans. Some of the more popular add-ons are listed below:
In addition to these three major types of plans, some home warranty companies will also provide an appliance-only and systems-only plan. An appliance-only plan covers all major appliances in the home and is the best home warranty plan 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 covered under a manufacturer’s 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:
Unlike homeowners insurance, which covers property damage from natural disasters and burglaries, a home warranty will cover most major components of large home systems and appliances. Additionally, homeowners insurance is usually required by your mortgage lender whereas a home warranty is optional.
|Home warranty||Homeowners insurance|
|Major systems, like your HVAC, electrical, and plumbing||Structural damage from severe weather and natural disasters|
|Major appliances, like your refrigerator, stove, and dishwasher||Theft|
|Additional coverage for your swimming pool or hot tub||Liability if someone gets injured on your property|
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.
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.
A home warranty can benefit just about anyone, from first-time homeowners to real estate agents.
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.
4 plans + optional add-ons
2 plans + optional add-ons
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.
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