What Are Home Warranty Upfront Charges?

Wondering what are Home Warranty Upfront charges? We got you!

Buying a home is probably going to be the most expensive purchase you will ever make. And if something goes wrong with one of your home’s systems or appliances, it can be a major headache. That’s where a home warranty comes in.

A home warranty is a contract that covers the repair or replacement of many of your home’s most important systems and appliances. But what are home warranty upfront charges, and why do they exist?

This article will fill you in with everything you need to know about home warranty upfront charges.


What is a Home Warranty?

A home warranty is a warranty covering the repair and replacement of home systems and appliances. Warranties are typically offered by home builders or real estate companies as an incentive to purchase a new home, but you can also purchase them separately.

Home warranties vary in coverage, but most include major appliances such as refrigerators, ovens, dishwashers, and clothes washers and dryers.

Some also cover HVAC systems, pools, spas, and garage door openers. Home warranties usually cover the cost of parts and labor for repairs but exclude preventive maintenance and normal wear and tear.

Home warranty service contracts are typically offered for one year, although some companies offer multi-year contracts.

Read: How Does Home Warranty Work?

Read: American Residential Warranty Review

What Are Upfront Charges?

You may have to pay an upfront charge when purchasing a home warranty. Home warranty upfront charges are a one-time fee that covers the cost of your home warranty policy. 

The upfront charge varies depending on the company you purchase your policy from and the type of coverage you choose. Generally, the more comprehensive the warranty, the higher the upfront charge.

The average upfront charge for a home warranty policy is between $100 and $500. Some companies also give you a discount if you pay for your policy in full at the time of purchase. However, most companies require that you make monthly payments for your policy.

The upfront charge is not refundable, so be sure to read the terms and conditions of your policy carefully. You will not receive a refund for the upfront charge if you cancel your policy.

Why Do Home Warranty Companies Charge Upfront Fees?

Home warranty companies charge upfront fees to cover the cost of your policy.

The upfront fee is used to pay for the administration of your policy and to cover the cost of any claims you may make during the term of your policy. 

In most cases, the upfront fee is a one-time charge. However, some companies may require that you pay an annual fee to renew your policy.

What Are the Benefits of Home Warranties?

Home warranties offer peace of mind by protecting you from the high cost of repairing or replacing your home’s systems and appliances.

In most cases, the monthly premium for a home warranty policy is much less than the cost of replacing or repairing an appliance. 

For example, usually the cost to repair a refrigerator is $200, while the average cost to replace a refrigerator is $1,500.

The average monthly premium for a home warranty policy covering refrigerators is $25.

So, if you had to replace your refrigerator, you would save $1,475 by having a home warranty policy.

Read: How Much Does A Home Warranty Cost Per Year?

Final Thoughts

Paying upfront for anything can be daunting, but home warranties are definitely worth the investment.

Home warranty upfront charges exist to cover the cost of your policy, and the benefits of having a home warranty far outweigh the cost.

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