What Does a Home Warranty Cover?
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A home warranty offers protection when an important home item fails due to wear-and-tear damage, saving you from paying expensive out-of-pocket costs. With so many home warranty companies claiming to offer the most comprehensive coverage, it may be challenging to find the best option for your needs.
In this guide, we’ll outline what to expect when purchasing a residential service contract, including typical coverage, pricing, and limitations. We’ll also offer our recommendations for the top home warranty providers across the nation.
What’s Covered by a Home Warranty?
Typically, home warranty coverage includes many of the essential systems and appliances you rely on throughout the home. While the extent of coverage may vary significantly between home warranty providers, a policy will generally protect components of the listed items necessary for operation. The home warranty provider will cover the cost of repairing or replacing these items if they break down from normal wear and tear.
It’s common for providers to divide their home warranty plans by systems and appliances. A systems-only plan will be sufficient to protect your air conditioning, plumbing, and electrical system. On the other hand, an appliance plan provides financial assistance when your refrigerator or dishwasher breaks down. Most home warranty companies also offer a combo plan where both systems and appliances are under warranty.
Most home warranty companies cover a standard list of systems and appliances. Coverage tends to vary between companies in terms of coverage caps and exclusions.
Systems and Appliances Covered Under Home Warranties
| Appliances | Systems |
|---|---|
| Refrigerator | Air conditioning system |
| Dishwasher | Heating system |
| Built-in microwave | Electrical system |
| Clothes washer | Plumbing system |
| Clothes dryer | Water heater |
| Oven, stove, and range | Garbage disposal |
| Garage door opener | Instant water dispenser |
| Trash compactor | Smoke detectors |
| Freestanding ice maker | Central vacuum |
| Built-in food center | Ceiling fans |
| Doorbell |
In addition to basic plans, many companies also offer add-on coverage for other common home items for an extra fee..
Here are a few common add-ons provided by home warranty companies:
- Extended electronic warranty
- Food spoilage due to broken refrigerator
- Guest units
- Limited roof leaks
- Pest control services
- Pre-season HVAC maintenance
- Re-key service for doors
- Secondary appliances or HVAC systems
- Septic tank and pumping
- Swimming pool and spa equipment
- Well pump
There are, of course, limitations and exclusions to every type of coverage. We recommend analyzing a sample service contract before signing up for coverage to understand how extensive the coverage is for both basic plans and add-ons.
What Does a Home Warranty Not Cover?
Home warranties don’t cover all types of repairs or types of damage. Although providers do differ, most only cover wear-and-tear damage to the necessary parts of the covered item. Here are some common equipment malfunctions that providers almost always exclude under home warranty coverage:
- Cosmetic issues
- Knobs, dials, shelving, and other nonfunctional accessories
- Damage caused by improper installation or insufficient maintenance
- Misuse of an appliance or system (using it for purposes other than residential use)
- Accidental or purposeful damage
- Damage from rust, corrosion, and sediment
- Pre-existing conditions at the time a home warranty begins
Find out the specific exclusions from a provider by asking a representative or looking for coverage limitations in a sample contract. In addition to excluded damage, you should also check the maximum payouts for individual appliances and systems. All home warranty companies will set limits on systems and appliances. Once the repair reaches the coverage limit within the time frame of the contract, you’re required to pay any extra costs out of pocket.
- Read more: Appliance Extended Warranties Explained
What Is a Home Warranty?
A home warranty is designed to do two things:
- Cover the repair or replacement of your system or appliance when a breakdown is caused by normal wear and tear.
- Send a vetted service provider to your home to diagnose and fix your issue.
This type of home appliance insurance protects homeowners from unforeseen out-of-pocket expenses and gives them peace of mind if something unexpected happens. Instead of potentially paying large repair costs, you’ll have a set premium to pay each month or each year, plus a reasonable service call fee for each repair visit.
Though similar to homeowners insurance, a home warranty is different because it’s an optional policy that helps cover the costs of unavoidable breakdowns to your home’s systems or appliances. Homeowners insurance, on the other hand, is a mandatory policy that protects your belongings from unexpected events like storm damage, theft, or fire.
Home Warranties vs. Homeowners Insurance
| Issue | Home Warranty | Homeowners Insurance |
|---|---|---|
| A lightning surge damages your appliances | – | ✓ |
| An air conditioning system begins blowing warm air during operation. | ✓ | – |
| A fire breaks out, leaving a few appliances inoperable. | – | ✓ |
| The washer and dryer malfunctions due to age and normal wear and tear. | ✓ | – |
When Does Home Warranty Coverage Begin?
Most home warranty providers require a 30-day waiting period before coverage begins. Some companies, such as The Home Service Club, have only a 10-day waiting period before coverage kicks in. If a covered item breaks during this waiting period, you will be responsible for all repair or replacement costs. Some companies may allow a seamless transition with proof of uninterrupted service if there’s no lapse in coverage.
How Long Does Home Warranty Coverage Last?
In most cases, a home warranty lasts 12 months. However, home warranty companies typically allow annual renewals. You may find discounts by purchasing a home warranty in three- or five-year intervals. In our 2022 survey of 1,000 home warranty customers, more than one in five chose to keep their home warranty for more than 5 years.
How Much Do Home Warranties Cost?
The amount you pay for a home warranty will depend on where you live and how much coverage you require. Those who live in high-cost-of-living areas will typically pay more, as will homeowners who want more comprehensive coverage with higher dollar limits. In general, however, home warranties tend to cost $45–$72 per month, or $540–$865 per year. You’ll also pay a service call fee for each technician visit, usually $75–$125.
Depending upon the problem you encounter, a home warranty could pay for itself with one or two claims. For reference, here are some common costs for home appliance repair.
- Clothes dryer: $100–$400
- Dishwasher: $50–$500
- Garbage disposal: $70–$250
- Oven: $100–$430
- Refrigerator: $40–$350
- Stove: $100–$500
- Washing machine: $50–$450
How Much Do Service Fees Cost?
Policyholders are also responsible for a service fee, or a deductible, which is paid to a technician each time they arrive on the scene to diagnose or repair the malfunctioning system or appliance. Throughout the industry, these fees generally range from $75–$125 per visit. Some providers will allow you to pay a lower service fee in exchange for a higher premium and vice versa.
Patrick Grayson, who is associated with Paramount Property Buyers, a real-estate business based in Indianapolis, says, “When shopping for a home warranty, consider the that each company offers and make sure it fits your needs." If you’re still not sure which home warranty company is right for you, compare some of the best home warranty companies.
| Provider | Liberty Home Guard | American Home Shield | Select Home Warranty |
|---|---|---|---|
| Get a free quote | Visit Site | Visit Site | Visit Site |
| Plan options | 3 + optional add-ons | 3 + optional add-ons | 3 + optional add-ons |
| Max covered items | 19 items | 23 items | 18 items |
| Monthly premium | $50–$70 | $30–$150 | $44–$48 |
| Deductible | $65–$125 | $100–$125 | $75 |
| Additional benefits | Up to $200 off when you sign up for an annual plan | Covers types of damage most other providers don’t | Gives customers two free months of coverage when you sign up for an annual plan |
Because plan pricing will vary based on where you live, the square footage of your home, and the plan you choose, we recommend getting a quote from all three companies so you can compare coverage options and pick a plan that provides you with the best coverage within your budget.
Read the following reviews to learn more about the home warranty companies we recommend:
- Select Home Warranty Review
- First American Home Warranty Review
- Liberty Home Guard Review
- Home Service Club Review
- Expert Review of American Home Shield
Frequently Asked Questions
What does a $500 home warranty cover?
An annual service contract for $500 will typically cover basic systems like air conditioning, electrical, and plumbing or important appliances like your refrigerator, dishwasher, washer, and dryer. Combo plans that include both typically cost a bit more.
What is covered under a home warranty?
Typically, a home warranty covers the crucial components that are necessary for the operation of a system or appliance. These parts can be repaired or replaced if the item breaks due to wear-and-tear damage.
What’s the difference between a home warranty and a manufacturer’s warranty?
Generally, a manufacturer's warranty covers both parts and labor on a single, newly-purchased item for a specific period if the item is defective. Home warranties, on the other hand, cover multiple appliances and systems, regardless of age, from breakdowns due to wear and tear.
How do I make a home warranty claim?
Most companies accept claims via email, a direct phone line, or through an online portal. You can often submit a claim at any time of day or night, but you will likely have to wait for the next business day for a response.
Are home warranties worth the money?
Home warranty coverage is a way of protecting your budget by spreading out the financial costs associated with inevitable breakdowns on systems and appliances. A home warranty may be a good option for first-time home buyers, people who are selling a home, or homeowners who just want a bit more protection on their systems and appliances.
Our Rating Methodology
We back up our home warranty ratings and recommendations with a detailed rating methodology to objectively score each provider. We conduct research by speaking with company representatives, requesting quotes, analyzing sample contracts from each company, and conducting focus groups and consumer surveys. We then score each provider against our review standards for coverage, cost, trustworthiness, plan transparency, customer support, and flexibility to arrive at a final score on a 5-point rating scale. To share feedback or ask a question about this article, send a note to our Reviews Team at reviews@thisoldhousereviews.com
