Understanding Your Home Warranty
A home warranty can be a decent investment to help you afford significant home repairs for home appliances or systems. However, it’s essential to understand what’s included in a home warranty before purchasing one.
Like insurance, no two warranties are the same, so it’s critical to read the fine print and ask important questions. In addition, some warranties cover much more than others, so decide what you need to be protected and how much it will cost.
What is a Home Warranty?
If you’re buying a home, you’ve likely been approached about a home warranty. Maybe the seller offered one to entice you to purchase the property, or perhaps your real estate agent suggested one.
Similar to a warranty on a car, a home warranty covers certain aspects of the home that could break down and can cause costly repairs. You may defray those costs when you have a home warranty and only be on the hook for a service fee.
Fortunately, you can buy a home warranty yourself even if the sellers don’t offer one, and you can even buy one year after living in your home.
The key is understanding what’s included in a home warranty and what isn’t. Like most warranties, there are terms and exclusions you must consider.
No two companies will offer the same protection, so like most purchases, it helps to shop around and get the best price and coverage on your home.
What’s Included in a Home Warranty?
So what’s included in a home warranty?
You can purchase a home warranty covering only appliances, home systems, or both. Even within each category, there are other considerations, such as exclusions, waiting periods, and maintenance requirements.
Most policies cover appliances or home systems that break down from normal wear and tear. However, they may require proof of adequate maintenance to ensure the appliance or system didn’t break down prematurely.
Before buying a home warranty, list everything you want to be covered so you purchase adequate coverage.
Again, while each policy is different, here are the basics of the appliances covered under a home warranty.
- Built-in microwave
- Garage door opener
- Trash Compactor
In addition to your appliances, a home warranty may cover the following:
- Electrical system
- Plumbing system
- Garbage disposal
- Water heater
- Central vacuum
- Ceiling fans
Always ask questions to know what a warranty covers and the details about each coverage. For example, one warranty may have exceptions to the plumbing system or only protect certain types of garage door openers. Know the coverage and compare it to what you need before deciding.
Home Warranty Add-Ons
Most home warranty companies allow add-ons or extra protection on your warranty. These add-ons are additional coverage that increases your premium but may be necessary based on what you have in your home.
Common additions include:
- Septic tank
- Pool or spa equipment
- A second refrigerator
- Roof leaks
- Pest control
- Additional living space, such as a guest home
What’s NOT Included in a Home Warranty?
Home warranties aren’t the solution to every problem your home has. Unfortunately, they often have exclusions or requirements that make specific systems uncovered.
Again, every home warranty company differs, but on average, the following are excluded:
Home warranties won’t cover issues that existed before the warranty was active. For example, if you purchase a home warranty with the house, the warranty company will likely need a copy of the home inspection to understand the condition of the appliances and systems.
Home Appliances or Systems not Properly Maintained or Serviced
If you don’t maintain your home systems or appliances, it could void your home warranty. Most home warranty companies will tell you what maintenance they require to keep your warranty effective. Think of things like changing filters, cleaning your appliances, HVAC and oven maintenance, and roof and gutter cleaning.
Excessive Wear and Tear Due to Something Other than Normal Use
If the home warranty company suspects you abused the home appliances or systems, they may not cover them. In addition, they won’t cover issues that result from pest damage, floods, or natural disasters.
If an appliance or home system is damaged by the failure of another appliance or system, it usually won’t be covered. For example, if a pipe bursts and there are other damages caused by the flood to your refrigerator and dishwasher, only the burst pipe might be covered, not the other issues it caused.
Home warranties typically don’t cover damage caused by pests either. If they can prove the damage was from a rodent or termite, they won’t cover it.
Most home warranties don’t cover leaking roofs unless you purchase the coverage as an add-on. A roof is part of the home’s structure, not a home appliance or system. However, it may be covered if you buy additional coverage for a leaking roof. Otherwise, your home insurance may cover it.
Items Covered by a Manufacturer’s Warranty
If you have appliances or systems still covered by the manufacturer’s warranty, the home warranty won’t cover them. It’s only after the manufacturer’s warranty expires that they cover certain items.
If the home warranty company decides you need an appliance or home system replacement versus repair, they may replace the item with a different make or model. However, they never guarantee they’ll replace it with the same item.
If the new appliance or system requires modifications to your home, such as shifting cabinet space or knocking down drywall, the warranty company won’t cover it.
What’s Included in a Home Warranty vs Home Insurance?
You might think you don’t need a home warranty if you have home insurance, but they are two different types of coverage.
Mortgage companies require home insurance covering significant disasters to the home’s structure or insured belongings due to a hurricane, tornado, or fire. It may also cover things like vandalism, theft, or liabilities, such as someone getting hurt on your property.
Home insurance is more likely to cover things like roof repair/replacement or rebuilding your home after a fire.
However, a home warranty covers your appliances or home systems, depending on the policy, for normal breakdowns through regular use. So, for example, if your refrigerator suddenly stops working, it would fall under a home warranty versus your home insurance.
Home insurance has a deductible, not a service fee, and it’s usually a much higher cost than a service fee. Most people choose a $1,000 deductible, but there are options for a $500 or $2,000 deductible too.
When Does Home Warranty Coverage Start?
Each home warranty company has a different timeline for when the coverage begins. The average wait is 30 days from when you purchase the policy, but it can differ. Always read the fine print to determine when the coverage begins.
Home warranty companies require a waiting period to ensure you aren’t buying a policy for an appliance or home system you know is broken. Being unable to file a claim for 30 days ensures the system or appliance you file a claim for falls under the warranty’s protection.
When Does Home Warranty Coverage End?
Home warranties usually last one year, depending on the coverage purchased. Some companies automatically renew coverage every 12 months, and others simply expire.
You may also find companies that offer more extended policies give you a discount if you purchase a warranty for three to five years, paying the full premium upfront.
How Much Do Home Warranties Cost?
An average home warranty costs $40 – $60 per month or $480 – $720 per year, plus the service fees you must pay for each service call. The average service call fee is $75 to $150 per visit.
Like insurance, you can play with the cost of your warranty by choosing different coverage options or increasing/lowering your service fee. The higher your service fee is, the lower the premiums, and vice versa.
5 Things to Know About Home Warranties
Understanding what’s included in a home warranty is important, as are the following factors.
1. Service Fees
All home warranties have a service fee. You pay this fee every time you call for someone to come to your property for a failed appliance or home system. This is the equivalent of a deductible or what you must pay for the repair or replacement.
2. Waiting Periods
All home warranties have a waiting period or time you cannot make a claim. The average waiting period is 30 days, but there are warranties with longer periods. This means you cannot make a claim if a covered appliance or system breaks down during that time.
3. DIY Repairs Could Void your Warranty
Even if your covered appliance or home system has a simple repair you could do yourself, don’t do it. Botched repairs could void your warranty. Instead, call your warranty company and let them inspect the item and determine what should be done. Even though it costs you a service fee, it’s worse not to have the item covered because you didn’t handle the repairs properly.
4. You Don’t Have a Say in the Contractor
When you call the home warranty company for a repair, they send out a partner contractor to check it out. Unfortunately, you don’t get to choose which company they choose, so you are at the warranty company’s mercy. So always know which contractors a company uses before buying a warranty.
5. The Repair can Take Time
It’s a process to repair or replace things under a home warranty. First, you call the warranty company to make a claim, and then they send a contractor out to evaluate the situation.
The contractor must report to the warranty company and await their approval or direction. Then, the warranty company determines if they will repair or replace the item. The back and forth could delay how long the entire process takes.
How to Choose a Home Warranty Company
You have many home warranty companies to choose from if you decide it’s right for you. Here’s what to consider when choosing a home warranty company.
The home warranty cost will likely be your main priority. However, consider not only the premium but also the service fees. You must pay the service fee each time a contractor comes to your house for a new repair.
Determine what you want to be covered under a home warranty and look for a policy that offers it. Decide if you want home appliances and systems covered or just one or the other. Always read the fine print to determine any exclusions or issues you might have with any of the covered items.
Ensure the home warranty company only works with licensed and insured contractors. You can ask specifically who they use and research those companies to ensure they are legit. The home warranty isn’t worth it if you don’t trust who’s coming to your home to fix the appliances or home systems.
Understanding what’s included in a home warranty is the key to deciding what’s right for you. Unfortunately, no two warranties are created equal, so read the fine print and consider the following FAQs about home warranties.
Does a home warranty cover a roof?
Roof repairs are often an area of concern for homeowners, but unfortunately, most home warranties don’t cover them. If you’re lucky, you might find a home warranty covering a roof leak but not a replacement. Unfortunately, they typically won’t cover the damages the leak caused, either. So instead, you’re better off using your home insurance for roof issues.
Does a home warranty cover solar panels?
Like roofing, solar panels are considered a part of the home’s structure, which isn’t what home warranties cover. Instead, solar panels usually come with a manufacturer’s warranty. You may also have the option to purchase an extended warranty from the solar panel company. Your home insurance may cover them too.
Is a home warranty a write-off?
For most people, a home warranty isn’t a write-off. However, if you run a home business, you may be eligible to write off some of the home warranty’s cost based on the percentage of your home used for business.
What’s included in a home warranty varies by company and even policy. You can decide what you want to be covered and play with the service fees to get a home warranty premium you can afford.
If you’re provided a home warranty when you buy a home or want to purchase your own policy, know what’s covered and what isn’t so you are best prepared for homeownership. A home warranty can help you make the most of owning a home, keeping it affordable while protecting the most important components in your home.