How Does Home Warranty Work?

Curious to know how does Home Warranty work? We got you!

A house warranty is one of the most important things to have for your home, and it covers main home systems and appliances for servicing repair, or replacement.

It acts as a financial safety net in the event that a large-ticket item fails, and it can extend the protection of manufacturer warranties after they have expired.

The warranty firm connects you with its connected contractors, so you just have to contact one number if you have a problem with an appliance or system covered by your plan, rather than searching for individual contractors.

A house warranty may also include reimbursement for replacement items. In this article, we will explain what a home warranty is and how does home warranty works.

How-does-home-warranty-work

What Is A Home Warranty?

A home warranty is a consumer convenience product that you may buy to avoid substantial out-of-pocket payments if an appliance or system breaks down.

A house warranty differs from homeowners insurance in that it has a distinct objective. Property damage is often within homeowners insurance.

It also protects guests with injuries on the policyholder’s premises. On the other hand, a house warranty protects appliances and systems that homeowners insurance or a manufacturer’s guarantee does not cover.

You may acquire a house warranty directly from a home warranty business at any time, regardless of the age or condition of your home. In general, people get home warranties during a real estate transaction.

If an issue develops with the contract-named equipment or system, you may submit a service request, and a contractor from the home warranty provider will diagnose, fix, and perhaps replace the item.

A service fee ranges from $60 to $150. The warranty company can choose to replace the item with a similar substitute or offer a monetary settlement depending on the fee restrictions specified by the warranty company.

Read: Is Home Warranty Worth It?

Read: How To Get Home Warranty To Replace Furnace?


How Does Home Warranty Work?

How Does Home Warranty Work

When you buy a home warranty, coverage usually begins 30 days after your first payment.

If a covered item or system fails while under warranty, you should file a claim or service request with your provider to have the problem fixed.

If you’re in the process of buying a house, your home warranty may already be in your mortgage payments.

Check with your mortgage lender and your home warranty company to see whether this is possible.

A house guarantee is designed to protect you from costly, unexpected repair expenditures and provide you peace of mind.

A house warranty can function as a cushion for a homeowner who doesn’t have an emergency fund or wishes to save money for something else.

In a short explanation, if something breaks due to wear or tear, you call your home warranty provider and submit a claim.

Your company sees and processes this request, and then you will get a technician to your home, generally within 72 hours.

The technician observes the problem and fixes the problem right there if they can; if not, they will come again to fix the issue.

At this point, you only pay the service call fee in your contract. It is as easy as it gets.


Difference Between Home Warranty & Home Insurance


What Does Home Warranty Cover?

What Does Home Warranty Cover

Home warranty coverage differs across programs. Home warranty plans often have three categories: systems plans, appliance plans, and combination plans.

1. System Plans

Air conditioning, heating, ducting, HVAC, plumbing, water heater, trash disposal, smoke detectors, ceiling fans, and doorbells are all covered.

2. Appliance Plans

Most appliances, including your refrigerator, dishwasher, range, oven, stove, built-in microwave, clothes washer and dryer, garage door opener, and freestanding ice makers, are covered by appliance plans.

3. Combo Plans

Both systems and appliances are covered. This is the most common plan, and home warranty providers frequently incorporate additional benefits with their combo policies.

Some home warranty providers offer customized plans that allow you to pick and choose which things you want to have coverage.

Many insurance companies also provide extra coverage for items like your pool, hot tub, spa, or second refrigerator. Customers can add these products to their monthly plan for an extra fee.


What Does a Home Warranty Not Cover?

It is important to note that home warranties do not cover everything. Here is a list of exclusions and limitations that a home warranty may entail:

  • Misuse or improper installation
  • Damage caused by pets
  • Pre-existing conditions
  • Appliances that are still under the manufacturer’s warranty
  • Cosmetic defects & damages
  • Equipment that has been changed or modified
  • Appliances that are used for purposes other than residential use
  • Secondary damages

Different home warranty companies may have different exclusions. We advise you to have a look at the coverage limitations section before signing up for any home warranty company.


How To Get A Home Warranty?

How To Get A Home Warranty

If you are sure that a home warranty is worthwhile, there are a few things to think about while selecting the appropriate protection plan for your house.

  • Type of Plan: Determine the sort of plan you want; some carriers group their plans by the number of objects covered, while others split coverage by the type of items, such as systems or appliances.
  • Consider Coverage Cap: Examine coverage limitations; a home warranty company may impose coverage caps on specific appliances or systems. This sum is usually sufficient for repairs, but it may not be sufficient for a complete replacement.
  • Customer Service: Consider how important customer service is when it comes to house warranties. You’ll need a timely and friendly customer support crew whenever an item or system goes down.
  • Prices: Check out the prices and make sure they are within your budget. If you have a tight budget, then there are plans under $50 that you can choose. Most companies will offer both monthly and annual plans. You can choose monthly payment if you cannot pay hefty fees upfront. But by choosing an annual plan, you may be able to save money. Also, consider the service fees, as you will incur this cost each time.
  • Home Warranty Accreditations: While choosing your home warranty company, look for a minimum accreditation of B+ from BBB. Also, look for online reviews on yelp, Trustpilot, etc.

Read: Who Pays For Home Warranty: Buyer Or Seller?


Are Home Warranties Worth It?

It may be worth it if most of your appliances and systems are out of the manufacturer’s warranty or if you want to protect yourself from unexpected expenses.

A home warranty may be a good thing to opt for if you are purchasing a new house and want to safeguard yourself from unexpected expenses. It may also be beneficial if you are selling your house.

However, home warranties come with limitations that you should consider.

Here are the pros and cons of home warranty that will help you in determining if it is something that you should go for:

Pros

  • Some companies cover pre-existing conditions.
  • Protect sellers from unexpected expenses.
  • Helps in avoiding out-of-pocket costs.

Cons

  • Some companies do not cover pre-existing conditions.
  • You will have to pay service fees., along with monthly payments.
  • Are limited by coverage caps.

What Is The Cost Of Home Warranties?

A one-year home warranty plan costs $400-$550 on average. More comprehensive plans may cost $480-$840 annually.

Apart from this, you are also required to pay service fees each time a technician gives you a visit to repair or replace certain equipment.

The service fees cost $60-$150 on average. You will be able to save more if you pay the annual fees upfront as opposed to paying monthly fees. 


The Verdict

A house warranty isn’t a perfect answer to the dangers and hidden expenses that homeowners must deal with. It won’t hurt you if a vendor wants to give you one.

Read the small language in the home warranty contract before purchasing one, and determine if the coverage is likely to pay off.

Homeowners/buyers who want a house warranty, as well as home sellers who wish to give one to a buyer, should conduct extensive research to identify a trustworthy home warranty business that hires respectable contractors and will pay for good repairs when they are needed.


FAQ

How do I make sure I know how my home warranty works?

You have to talk with your warranty provider and get every bit of information you can as to how your specific home warranty works, but there are no major differences between home warranties as they are similar to each other.

Do all home warranties work the same?

No, but they all follow similar protocols in case of a problem with your appliances.

It is best to check with your company about what to do in times of appliance problems.

Do I get tax deductions on home warranties?

For a house that is a rental property, IRS allows tax deductions on home warranties.

Also, you can get a deduction for a portion of your house if you have a home office. You do not get any tax deductions for home warranties taken for a primary residence. 

A Home Warranty Lasts For How Long?

On average, a home warranty lasts for a year, and you can renew it after the period ends. Some home warranty companies also offer three-year plans. 

NPC Overall Rating

Leave a Comment