Your home may be the biggest investment of your life.. And while homeowners insurance helps you cover the costs in the case of a fire or an adverse weather event, it won’t help with the costs of replacing appliances, fixing your HVAC system, or making other regular repairs as they come up. A home warranty usually will, though. Here’s what you can expect a home warranty to cover.
A home warranty is a type of service contract with a private company, stating that it will repair or replace specific covered items in your home over a certain period. This is an optional type of coverage that you can purchase when buying a home. It typically lasts for one year at a time, and the warranty can be renewed annually.
Home warranties are separate from builder warranties. With a home warranty, you’ll purchase your coverage outright from the warranty company. A builder warranty, on the other hand, is provided by the builder when you buy a new construction home or do a major renovation.
A builder warranty usually covers repairs on permanent parts of the home and structure, such as its foundation, electrical system, and plumbing. Builders are required to provide warranties on newly-built homes that are financed with an FHA or VA loan. Others may include them as a courtesy.
The cost of a home warranty can vary widely. Factors such as your home’s size, age, and location will play a role. So will the company’s service fee structure and any additional coverage you choose. Costs also vary by company, so shopping around is critical if you want to get the best price for the most coverage.
According to Home Warranty of America, the average annual cost of a basic home warranty ranges from $350 to $600 nationally. If you add any extra coverage, the annual price could increase by approximately $100 to $500.
You’ll pay a service fee each time the company sends a contractor to your home, but this often costs less than paying an external company to fix an appliance.
When you need to repair or replace a covered item, contact your home warranty company and submit a service request. You’ll then need to pay a service fee (this is similar to paying a deductible on your insurance), and your warranty company will send a repair provider to your home.
As with cost, the coverage included in a home warranty can also vary greatly. Generally speaking, though, you can expect a basic home warranty service contract to cover the following:
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Major systems, including heating, ductwork, air conditioning, plumbing, and certain electrical issues
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Garage doors
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Ceiling fans and exhaust fans
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Garbage disposals
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Water heaters
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Sump pumps
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Appliances, such as microwaves, washers, dryers, dishwashers, ovens, and refrigerators
Many home warranty providers offer the option to add additional coverages for an extra fee. These additional coverages may include water softeners, pool or spa equipment, roof leaks, septic systems, wells, and more.
Home warranties typically do not cover cosmetic issues (such as a dented refrigerator that still functions properly) or damage resulting from pests, neglect, misuse, or improper installation. Secondary damages — ones that occur from a broken appliance or system — typically aren’t covered either.
If an item is already covered by a manufacturer’s warranty or your homeowners insurance policy, a home warranty probably won’t cover it.
If you’re buying a new construction home, there’s a good chance your builder will automatically include a builder’s warranty, which will cover more permanent items of the home, such as the foundation or a wider range of electrical system issues.
If you’re buying an existing home, you may be able to negotiate for the seller to cover all or part of the cost of a home warranty as part of your closing transaction. You can also buy one outright, directly from a home warranty company. Here are some popular home warranty companies to consider:
That depends on the type of warranty you’re referring to. A home warranty, a service contract purchased by you or the seller, covers the replacement and repair of certain appliances and internal systems, typically for a one-year period. A builder’s warranty, which may come with your home if it’s brand new, covers the repair or replacement of more permanent parts of your home, such as the foundation and full electrical systems.
One con of a home warranty is the limitations on what the policy covers. Before signing up for a home warranty, review the terms. You may decide to upgrade your policy to cover more specific areas of your home, such as a pool or well pump.
The biggest benefit of a home warranty is that it can help alleviate some of the costs and hassle that come with maintaining your home — at least for a period of time. If you need a covered appliance replaced or repaired, you may only need to pay a small service fee rather than the entire cost of replacement, installation, and parts, like you would without a warranty in place.
Laura Grace Tarpley edited this article.
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