What Is a Home Warranty?
A home warranty is a type of home protection plan that homeowners pay for monthly or annually. When a covered item, such as an appliance, built-in system, or in-ground pool malfunctions, policyholders can file a claim with their provider by paying a previously agreed-upon service call fee. The provider will then send a licensed and insured technician to assess, diagnose, repair, or replace the malfunctioning components or unit.
Compared to homeowners insurance, which covers your home’s structural components and personal property in events of peril, such as fire or theft, home warranties protect your home’s internal components in events of everyday wear and tear.
How Does a Home Warranty Work?
Though it’s not an official insurance policy, a home warranty functions similarly to insurance. To keep the policy active, you will have to be current on all monthly fees and service fees. When you file a claim, you will be responsible for a previously agreed-upon service charge, which is typically paid to the contractor or technician that diagnoses your malfunctioning item.
If the claim is approved and determined to be a covered item, the home warranty provider will pay to repair or replace the malfunctioning item up to the coverage limits outlined in the service agreement.
What Does a Home Warranty Cover?
Home warranties cover your home’s internal components, such as built-in systems and appliances. Built-in systems typically include items such as your HVAC unit, ductwork, electrical, and plumbing. Commonly covered appliances include dishwashers, ranges, ovens, stoves, laundry machines, refrigerators, and built-in microwave ovens.
How Much Does a Home Warranty Cost?
According to our research of 39 providers, the typical service call fee in the home warranty industry is about $77 per month. The monthly fees across these providers came out to an average of roughly $39 on the lower end up to $63 on the higher end.
These prices reflect base plan options without add-on options factored in. You may be eligible for additional discounts if you cover more than one property, pay annually, or select a multi-year plan term.
Are Home Warranties Worth It?
Home warranties are worth it for any proactive homeowner that wants to save money on future repairs and replacements for their home’s essential items. One of the most helpful ways of framing the usefulness of a home warranty policy is considering the most expensive and most likely repair that may arise during the plan term, typically about a year.
If this repair seems out of your budget, a home protection plan can help you minimize the amount of financial burden you’re under in the long run when the repair or replacement becomes necessary.