What Does My Home Warranty Cover?

If you have a home warranty (sometimes called a home service agreement), you are probably curious about what exactly that warranty covers and why it benefits you to have one. Generally, a home warranty helps you cover the cost of repairs or replacements of home appliances that experience mechanical failure as a result of normal, routine use. The terms of every home warranty vary, and providers offer different types of warranty plans based on your needs.

Some home warranty providers offer plans that specifically cover home systems such as heating and air conditioning, electrical, plumbing, including water heaters, and central vacuums. Other home warranty plans specifically cover appliances--washers and dryers, dishwashers, ovens and ranges, built-in microwaves, garage door openers, etc. You can also purchase plans that incorporate both systems and appliances, based on your personal requirements. In general, home warranty plans cost a fixed fee per month, cover a service term of twelve months, and are renewable at the end of the year.

Home warranties are not the same as homeowners insurance. Homeowners insurance is required by mortgage lenders, and pays for damages incurred from fires, severe storms, theft, or even as a result of an injury sustained on your property. Homeowners insurance will not cover a malfunctioning or broken appliance. Home warranties are also different from manufacturer’s warranties. A manufacturer’s warranty will usually cover the cost of parts, but not necessarily labor. If you aren’t a skilled DIYer, you may still find yourself paying a technician to make repairs on appliances with a manufacturer’s warranty. A home warranty can help you bridge this gap.

Home warranties can also be especially useful if you plan to sell your home, or are buying a home with existing appliances. Many home warranty policies are transferable after a home sale, and potential buyers may feel more confident that the appliances they inherit are warrantied. Many home warranties will cover systems and appliances regardless of their age, so long as they are in good working order at the time the warranty is issued.

There are a few things that are not typically covered by home warranties. Non-mechanical items such as windows, walls and doors are usually not covered. Plus, your home warranty does not preclude you from performing normal household maintenance such as replacing furnace filters or periodically flushing your water heater. Damage to appliances or systems resulting from negligence or lack of proper upkeep may not be covered by your home warranty.