What Buyers Should Know About Home Warranty Plans and What to Ask When Shopping for One

Close-up of a home warranty document with a red and gold pen, highlighting the importance of reading the fine print before signing. — Before you sign up for a home warranty, make sure you understand what’s covered and what’s not. Read the fine print and ask the right questions!

What is a Home Warranty?

A home warranty is a service contract that helps cover the cost of repairing or replacing major home systems and appliances due to normal wear and tear. It is different from homeowners insurance, which covers damages from events like fires, storms, and theft. Home warranties provide peace of mind by reducing the financial burden of unexpected repairs.

What Does a Home Warranty Cover?

Coverage varies by provider and plan, but most home warranties typically cover:

Major Appliances – Refrigerators, ovens, dishwashers, washers, dryers, and microwaves.
Home Systems – HVAC (heating, ventilation, and air conditioning), plumbing, electrical, and water heaters.
Optional Coverage – Some plans allow add-ons for pools, septic systems, well pumps, and roof leaks.

What is NOT Covered?

Home warranties do not cover everything. Common exclusions include:

Pre-existing conditions (issues that existed before the policy started)
Improperly maintained appliances or systems
Cosmetic damages (scratches, dents, etc.)
Structural issues (e.g., foundation problems, walls, and roofs unless specified as an add-on)
Non-mechanical items (e.g., windows, doors, and flooring)

Pros and Cons of a Home Warranty

Pros:

Helps with unexpected repair costs
Provides convenience by connecting homeowners with service providers
Can be a selling point when buying or selling a home
Covers aging systems and appliances that may break down after move-in

Cons:

Does not cover all repairs or replacements
Service call fees and deductibles may apply
Repair choices are often limited to the warranty company’s contractors
Claims can be denied due to improper maintenance or pre-existing conditions

How to Choose the Right Home Warranty Plan

Since home warranty plans differ widely, it’s important to do your research before selecting one. Here are some key questions to ask:

1. What is Covered and What is Excluded?

Ask for a detailed list of covered items and read the fine print for exclusions.

2. What Are the Service Fees?

Most warranties charge a service call fee ($50-$150 per visit) when you request a repair. Some plans also have deductibles.

3. What Are the Coverage Limits?

Many plans have payout limits per item or per contract term. Make sure the limits are reasonable for your needs.

4. Can I Choose My Own Contractor?

Some companies require you to use their approved service providers, while others let you choose your own contractor for reimbursement.

5. How Long is the Coverage Term?

Most plans are for one year, but some offer multi-year discounts. Ask if the plan renews automatically.

6. Are There Any Waiting Periods?

Some companies require a 30-day waiting period before coverage starts, while others begin coverage immediately if purchased with a home.

7. How Are Claims Handled?

Find out the process for filing claims, average response time, and if there are any caps on the number of service requests allowed per year.

8. What Happens if a Covered Item Can’t Be Repaired?

Some plans offer full replacement, while others only provide depreciated reimbursement or cash toward a new unit.

9. Are There Discounts for Bundling Plans?

Some companies offer lower rates if you bundle your home warranty with homeowners insurance or purchase multiple years upfront.

10. What Are the Customer Reviews and Ratings?

Check online reviews and ratings on sites like the Better Business Bureau (BBB), Trustpilot, and Google to see customer experiences with claims and service.

Should You Get a Home Warranty?

Home warranties can be beneficial, especially for first-time buyers or those purchasing older homes with aging systems and appliances. However, they are not always necessary for brand-new homes or for buyers who prefer to save money for repairs instead of paying for a warranty.

A home warranty can offer valuable protection, but it’s important to understand the details before signing up. By asking the right questions and comparing different plans, you can make an informed decision that fits your needs and budget.

If you have any questions about home warranties or need guidance in the home-buying process, feel free to contact us below!