What To Ask When Buying a Home Warranty (2024)
Purchasing a home warranty is a big decision, and picking the right provider is rarely an easy choice. Our research team has talked to experts and interviewed home warranty customers to determine eight questions you should ask before purchasing a home warranty plan.
1. How Much Does a Home Warranty Cost?
Most home warranties consist of a monthly or annual premium and a service call fee, which you only pay when you have repairs. Overall, home warranties typically cost anywhere from $540 to $865 per year. Monthly premiums range from $45 to $72, and service call fees usually fall between $75 and $125 per claim. Where a provider sources parts and labor contributes to a plan’s overall cost, according to Fant Camak, a real estate agent with Coldwell Banker Caine.
Another factor affecting home warranty costs is your selected type of coverage. The more you pay, the more comprehensive coverage you’ll generally receive. For example, a basic home warranty plan that only covers home appliances will likely cost less than a comprehensive plan that includes home systems and appliance coverage.
Providers offer additional coverage options for separate home items to supplement your plan. Price varies per add-on, so pool coverage may cost more than for another freezer. Finally, your service call fee is what you’ll pay to the technician who diagnoses or fixes covered problems. Some companies offer a higher service call fee in exchange for a lower premium and vice versa.
2. What Are the Coverage Limits and Exclusions?
No home warranty covers all problems that could arise, so consider coverage limits and exclusions. Generally, providers cover up to a set dollar amount, both overall and per item, outlined in the contract’s fine print. For example, if your air conditioning stops blowing cold air, your provider will pay up to the coverage limit for a repair or replacement, often around $1,500. You’re responsible for additional costs if the repair or replacement exceeds the coverage limit.
Providers also establish conditions that a breakdown must meet before it gets covered. For instance, all companies cover the repair costs of a system or appliance breakdown caused by normal wear and tear. However, providers won’t cover breakdowns caused by the following types of damage:
- Accident or neglect
- “Act of God” (disaster, flood, fire, etc.)
- Cosmetic damages
- Improper installation or repair
- Insufficient maintenance
- Preexisting conditions (known or unknown)
- Rust, sediment, or corrosion
In addition, companies won’t cover nonessential parts of covered items, such as door handles, shelves, grilles, and knobs. Providers won’t cover inaccessible appliances, or the homeowner will need to pay for the work required to make an appliance accessible for repairs. Avoid unpleasant surprises by knowing your provider’s coverage terms.
3. How Does the Claims Process Work?
Before signing up for a coverage plan, the claims process deserves great attention. Mike Qiu, the owner of Good as Sold Home Buyers, recommended asking a provider what documentation you must present before filing a claim, how long it takes to process, and what steps you must take to file it. Doing so “will help you better understand what to expect in the event of a claim,” Qiu said.
Ask the provider how its customer service department handles claims processing. Some companies have dedicated claims departments available 24/7 while others don’t. Ask how the provider prefers to receive claims, whether that’s via online portal, email address, or phone. Uncover as many details from the provider as possible to see if its process fits your needs.
4. How Much Coverage Do I Need?
Your preferred amount of coverage depends on the systems and appliances you own, your budget, and external factors that may affect coverage needs. For example, if you own an older home with new appliances under a manufacturer’s warranty, you probably don’t need an appliance or combination plan. A systems-only plan may be the better choice.
To determine coverage needs, ask yourself the following questions:
- What systems and appliances do I own?
- How old are my systems and appliances?
- Which systems or appliances do I use most often?
- Are any of my systems or appliances under a manufacturer’s warranty?
- How much am I willing to pay for a home warranty contract?
- Do I want a more expensive plan that covers items or types of damage that other providers don’t cover?
Answering these questions can give you a better idea of the type of coverage you should purchase.
5. Who Are the Contractors the Provider Uses?
Another factor to consider before signing up for a home warranty provider is which service technicians it contracts. Most companies have an established network of service providers they use to address needed home repairs. Ask the provider how it sources these contractors. Determine whether the provider has a vetting process before it sends work to a contractor, including whether they conduct background checks.
If you live in a rural area, ask the company if it works with local contractors. In some instances, providers don’t have an established service provider in rural locations, leading to service delays. While some companies allow you to choose your own contractor or technician, the company must usually approve them. Make sure you understand this approval process.
6. What Do Existing Customers Think?
Reading reviews on third-party review websites can tell you how well a provider handles customer service requests. If a company receives consistently positive reviews, you’ll likely have a good experience. Check the Better Business Bureau (BBB), Google Reviews, and Trustpilot to find your provider’s customer reviews.
Your local real estate agent is another source who can suggest reputable home warranty companies. Agents typically have experience with many companies and can offer recommendations based on how well a provider protects homes. Note that a real estate agent may be getting commissions for their referrals, so do your own research as well.
7. When Does Coverage Begin?
Unlike a homeowners insurance policy, home warranty coverage doesn’t start when you buy a plan. Most home warranty providers have a 30-day waiting period, and some have strict coverage limits during this time. The waiting period is the time that must pass before coverage begins. It’s in place to confirm that your systems and appliances are in working order. If a covered item breaks down during the waiting period, your provider won’t cover it. A repair technician can often identify damage that occurred more than 30 days prior.
8. Can I See a Sample Contract?
The answers to many of these questions can be found in each provider’s contract documentation. When comparing providers, look for sample contracts to see the specifics and limitations of the coverage on offer. Most providers will have samples on their websites, and you can also search “[provider name] sample contract.”
Don’t just read the contract—ensure that you understand it. When customers are unhappy with their home warranty coverage, it’s often because the limitations of the policy were unclear. Don’t be afraid to ask the sales representative tough questions about coverage, exclusions, or the claims process. As with any contract, make sure that you know what you’re getting before signing.
Our Conclusion
Whether you’re a long-time homeowner or are new to homeownership, a home warranty protects essential systems and appliances from wear-and-tear damage, giving you peace of mind. Armed with answers to the questions above, you’ll know what to consider when researching providers.
To help your research, check out our list of the best home warranty companies available across the U.S. We compared 13 providers using our in-depth review standards, which analyze coverage limits, customer service, and additional perks.
FAQ About Home Warranties
Do I need a home inspection before purchasing a home warranty?
No, you don’t need a home inspection before purchasing standard home warranty coverage. However, some providers require a home inspection if you wish to purchase add-ons such as pool coverage. If you recently purchased your home, you can provide the home inspection report from the home-buying process.
Is a home warranty required at closing?
No, a home warranty isn’t required while closing a home sale since it’s a service contract, not home insurance. However, if you’re selling your house, a home warranty can increase its value and give peace of mind to the new homeowners.
How soon can I use a home warranty after purchase?
Generally, you can file a claim with your home warranty provider after the waiting period ends. The waiting period is 30 days for most providers. Read your provider’s sample contract to know exactly when the waiting period ends.
Is a service contract the same as a home warranty plan?
No, a service contract isn’t the same as a home warranty plan. A service contract is sold on an individual appliance and protects against defective parts and breakdowns. It’s purchased separately from the sale of the product. Bundling is the practice of selling the product and the warranty as a bundle, not as an add-on. Bundling is against regulations for home warranty and service contracts.
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