A home warranty provides service contract protection against the normal wear and tear breakdowns of many major systems and appliances in a home. While home insurance protects against the unforeseen, like fires or storms, a home warranty offers protection for the sudden breakdown of common systems and appliances like the HVAC, plumbing, electrical, and major appliances such as refrigerators, ovens, and dishwashers.
Usually, home warranties are one-year contracts that can be renewed on an annual basis. Home warranties are best for homeowners, especially in older homes, who want protection against expensive repairs or replacements of important home systems. For example, if your furnace or air conditioning breaks, your home warranty can save you thousands of dollars in repair or replacement costs.
Buyers should also be aware that most home warranties come with a service fee or deductible that is paid when a technician visits to repair or replace a covered item, and that in many cases home warranty companies will contract with a network of licensed contractors who will perform the service. Coverage also differs among providers, so buyers should be aware of which items are and are not covered, what the payout limit is for each covered item, and whether there are any exclusions or conditions.
It’s likewise important to realise that home warranties aren’t all-encompassing. Depending on the policy, some pre-existing conditions, problems resulting from improper maintenance, or cosmetic damage could be excluded. Other appliances or systems, such as pools, hot tubs, or secondary refrigerators, might require additional coverage.
Decide how much coverage you need. If you live in a newer home, with fewer systems, you might not need a super-comprehensive policy. Likewise, you don’t want to pay for a policy covering a system or appliance you don’t have, like a pool or septic system. Older homeowners, on the other hand, may very well want more coverage. Once you know how much coverage you need, compare the annual premiums and service fees from different providers.
