Home Warranty Plans and How They Work

broken dishwasher

What Are Home Warranties?

Different plans define different warranties. Essentially, if you pay in more, you get more coverage on your warranty. A warranty for a home is a contract that says if you pay in X amount, the company providing coverage will take the cost for replacements or repairs on components of a home.

Such packages usually have a term length that’s a year. Often appliances are covered under home warranty packages. This is similar to homeowner‘s insurance, but there are notable differences. Specifically, home warranties cover features of a home that typical insurance packages won’t. System components and home applications will break down owing to wear and tear.

Think of it like this: home warranties cover gaps in insurance packages. You can balance insurance out with a home warranty package, getting the most coverage for the least cost between the two — depending on what you purchase. Warranty coverage and insurance coverage will vary based on location.

With warranties, a few things you can expect to be covered include:

  • Central Air Conditioning Systems
  • Kitchen Appliances
  • Central Heating Systems
  • Washers And Dryers
  • Plumbing
  • Electrical
  • Roof Leaks

Home Warranty Considerations

Some home warranties may not require inspection for enrollment — the contract will, however, stipulate proper installation of appliances, and correct maintenance. Also, it is expected that items are working well when the warranty is applied for. These plans won’t generally cover pre-existing issues.

Coverage starts when you close on a given contract. There may be leeway, depending on where you buy. For example, it may be possible to buy coverage and stipulate a specific starting date for its application, if that’s necessary. Most plans are going to be for twelve months, you’ll have renewal options. If you sell the property, warranty coverage can transfer to the new owner if that’s legal in your state, and you can find a warranty provider who does this.

Some things won’t be covered under warranties–windows commonly aren’t, neither are doors. Most contracts won’t cover basic maintenance repair, such as a furnace filter replacement. Also, you can expect contractors to be sent out by most warranty companies. There may or may not be associated fees–it will depend on who you get the warranty through. Generally, though, you won’t be responsible for equipment and repair costs; only the fee for a “trade call”. Certain modification-related installation costs won’t be covered, except through the highest-end coverage plans.

Ask The Right Questions

When you speak with someone about their home warranty services, ask these few specific questions before you sign on the dotted line:

  • What Protection Already Exists?
  • What Costs Are Associated?
  • What Exactly Is Covered?
  • If Repair Is Not Possible, Will The Warranty Replace The Damaged Goods?
  • What Limitations Define This Plan?

What Protection Already Exists?

Sometimes home credit cards extend warranties on appliances. If you’ve already got a warranty, there’s no need to pay for it twice–you can get exact coverage on what really needs it at a reduced price.

What Exactly Is Covered?

Know precisely what coverage you have, and how much of it there is. Sometimes only partial repairs are covered.

If Repair Is Not Possible, Will The Warranty Replace The Damaged Goods?

Should repair be impossible, you want a solution that offers replacement options. Some plans have this, some don’t, so know what you’re signing up for.

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What Limitations Define This Plan?

Know how much a given plan is designed to cover. You can generally expect coverage to be as high as $2,000 on most plans–but it’s going to differ.

Finding The Best Choice For You

Ask these questions of yourself, and of those providing coverage–some answers you won’t be able to get from them directly. Depending on how old your home is when you purchase it, and how long you intend to be there, different plans may be more or less applicable. Different regions will have different idiosyncrasies, however, and it’s always worthwhile to explore a few alternatives.

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Wally