Home warranties can offer some peace of mind if something in your house breaks, which is why they are commonly a part of home purchases. Home warranty plans can help pay for regular wear and tear, unlike homeowner’s insurance. Your homeowner’s insurance only covers costs when damage is accidental.
Home warranty companies can repair or replace a covered appliance or system. However, “home warranty” might be misleading, since they work more like service contracts. Consider the following 5 steps to choosing the most convenient home warranty for you.
A home warranty is essentially an agreement with a company to pay part or all costs to repair and replace covered items. Home warranty plans can cover components that homeowner’s insurance policies do not. The home appliances and systems that home warranties cover depend on the plan you choose and any add-on coverage you purchase.
The seller may include a home warranty plan as part of the sale. Buying a home is expensive, and having a service contract could help you avoid costly repairs and replacements during your first year as a homeowner.
Here are the typical steps to make a home warranty claim:
- Contact your home warranty company about the broken item to request service. You may need to pay a discounted service fee.
- The company sends a repair technician to your home.
- The technician repairs the item or files for a replacement.
To keep the warranty active, you’ll usually need to renew the plan before it expires. But you may be able to find a plan that lasts longer, like up to 10 years.
Benefits of Home Warranties
- The annual cost of a home warranty tends to be much less than most major repairs. For example, a new refrigerator or water heater could cost more than $1,000 to replace, whereas most annual warranty premiums are just a few hundred dollars.
- You do not have to research and contact contractors. Home warranties could save you time and frustration trying to schedule a quality professional, since the company handles all claims. This aspect could be particularly helpful if you are new to the area.
Home Warranty Drawbacks
- Home warranty companies decide if claims are valid. Some warranties have an “improper maintenance” clause, so it will not cover your appliance or system if it broke because of misuse or neglect. This clause could lead to disagreements about your claim legality between you and the company.
- The company may not give you a choice when it comes to replacements and contractors. For instance, they may replace your older Whirlpool washing machine for an unknown brand. Or, you may not like the level of professionalism from a repair representative.
As an alternative to a home warranty, you could set money aside in an emergency fund. Your emergency fund can grow even faster if you put it in an interest-accumulation account.
Home warranty companies set their prices based on a few personal factors. Typically, the company needs information about your home, its location, and other details to estimate a price.
Also, your home warranty quote greatly depends on the level of coverage you want, and may differ based on the following factors:
- Property type – Detached single-family, townhouse, condominium, duplex
- Plan type – Basic to premium, plus add-on coverage options
Some of the most popular homeowner warranty companies offer monthly or quarterly installments, while others require an annual upfront fee. But the premium is not the only cost for a warranty contract. You may have service call fees for repairs, which can range between $60 to $100 on average.
Additionally, not all broken or damaged items fall under the plan’s coverage, so you may be out of pocket for certain repairs and replacements. If the company denies your claim, it may not refund the service call fee.
The most widely-used homeowner warranty companies usually offer coverage in tiers, so you can select the level of coverage that fits your budget. Before you choose a plan, you may want to consider the condition of your home.
Depending on what you need, you may choose to cover some of the following items:
- Electrical Systems – Wiring, outlets, and fuse boxes
- Electronics – Televisions, computers, smart home products, and game consoles
- Heating and Cooling – HVAC units and heat pumps
- Kitchen Appliances – Refrigerator, stove (oven/range), and microwave
- Laundry Appliances – Washing machine and clothes dryer
- Plumbing Systems – Water lines, leaks, stoppages, and breaks
- Water Features – Swimming pools, spas, and hot tubs
When getting your home warranty quote, you should discuss what is specifically covered and what is not. Many home warranty companies commonly exclude the below list of items:
- Structural Components – Foundations, flooring, and walls
- Pre-existing Problems – Asbestos, radon gas, and mold
- Commercial-Grade Equipment – Like a commercial range or freezer
- Corrosion Damage – Rust and sediment
Some policies do not allow you to make a claim within the first 30 days of purchasing the policy. Ultimately, your specific warranty plan determines which appliances and systems are covered.
It is a good idea to compare plans from popular homeowner warranty companies to see which options match your needs and budget.
The home warranty company and plan that is right for you depends on your needs. For example, you may be interested in a comprehensive policy if you have older appliances. Or, perhaps you only need a small amount of coverage.
There are several home warranty companies you can choose from. Here are some of the most popular options across the country.
American Home Shield (sometimes confused for HomeShield of America) is a home warranty company that has contracts with more than two million people. AHS covers up to 23 appliances and systems and has plans starting at $39.99 a month.
AHS offers three types of warranty plans:
- ShieldSilver – Covers parts for 14 major systems, including electrical, plumbing, and heating and cooling systems
- ShieldGold – Adds 9 more appliances to the ShieldSilver plan, such as kitchen and laundry appliances
- ShieldPlatinum – Includes ShieldGold coverage plus roof leaks, free HVAC tune-up, unlimited A/C refrigerant, and code/permit violations
You can add additional coverage as needed, such as a guest house, septic pump, swimming pool, or wine refrigerators.
Choice Home Warranty (or HomeChoice Warranty) has a nationwide network of contractors and gives you one month free when you sign up for a single payment plan.
Choice Home Warranty offers two plans and a slew of optional coverage items:
- Basic Plan – Covers heating, electrical, plumbing, several kitchen appliances, and more
- Total Plan – Adds coverage for air conditioning, refrigerator, and laundry appliances
- Optional Coverage – Pools, well pump, septic system, and more
You can request home warranty quotes online and by phone. Before you buy a plan, however, you may want to consider the benefits and drawbacks.