A home warranty is a contract that helps cover the cost of repairs and/or replacements for appliances and other vitals systems in your home.
A home warranty plan typically charges a monthly fee, in exchange, the home warranty provider will pay to fix or replace things like furnaces, air conditioning systems and more (depending on your plan and coverage). Home warranty plans typically last one year and need to be renewed annually.
If you don’t have a home warranty plan, you will have to foot the bill for unexpected breakdowns. But if you have the right home warranty coverage, you might not have to pay any out of pocket costs.
What Does a Home Warranty Cover?
Every home warranty plan is different, so it is essential that you read and understand your contract before signing up. In general, home warranty plans can cover things like:
- HVAC (heating and air conditioning)
- Home appliances (ovens, refrigerators, dishwashers, washers, dryers, etc.)
- Water Heaters
When you purchase a home warranty plan, talk with your seller to understand what is and isn’t covered. If you have a system or appliance that isn’t typically covered, you can usually request to add it to the plan (for an additional fee, of course). One common addition is to include a pool or hot tub (if you’re lucky enough to have one!).
Keep in mind, if something breaks because of improper usage, then it will not be covered by a home warranty.
How Much Does a Home Warranty Cost?
Just like an insurance plan, the cost of a home warranty plan depends on a variety of factors. Some of those factors include:
- What needs to be covered – The more appliances and systems that need to be covered, the more expensive your plan will be.
- Location – Home warranties can be slightly more expensive in high cost-of-living areas only because it costs more to hire technicians to fix broken systems and appliances.
After getting quotes from a few different providers, we uncovered that home warranties typically cost around $300-600 annually or $25-$50 a month. If you’ve ever had to replace a plumbing system, you know that $300 is basically nothing – which makes home warranties worth it for many homeowners.
One additional fee that you can expect to incur is what is called a “trade call fee” or “service call fee.” A trade call fee is a flat fee charged for having someone come to your home to inspect the appliance and diagnose the potential issue. On average, these fees range from about $50 to $150 per service call. If you opt for a higher service call fee, your monthly payment will be lower.
Who Pays for a Home Warranty, Buyer or Seller?
If you are buying or selling a home, you might have questions about home warranties. In that case, it is essential to differentiate between a seller’s home warranty and a homebuyer’s warranty.
It is not uncommon to offer a seller’s home warranty when selling a home.
Offering a year of home warranty coverage is a great way to sweeten the pot and attract more buyers. Plus, you can often ask for a few thousand more dollars (even though the warranty won’t cost you half that much). A seller’s home warranty is also beneficial because it will protect against costs if something breaks down while selling the home (like during the inspection, for instance). This is especially nice if you own multiple properties and don’t want to deal with costly repairs.
If you’re a homebuyer, you should ask your real estate agent if the seller is willing to cover a home warranty. If they aren’t ready to offer this concession, you can always get a homebuyer’s warranty. It is prevalent for new homeowners to opt for a warranty to provide some much-needed peace of mind. The last thing you want to worry about after putting down a hefty down payment is how you’re going to pay for costly repairs.
But you do not need to be buying or selling a home to take advantage of the benefits home warranties provide. Any homeowner can purchase a home warranty. Typically, there is a 30 day waiting period for coverage to start.
How Do You Get Your Home Warranty to Cover a Broken Furnace or Air Conditioner?
If an appliance breaks down, the processes for getting it replaced or repaired is very similar to home or auto insurance. If something happens, you simply need to file a claim with your home warranty provider.
After you file your claim, the provider will typically send a professional to your property to inspect the issue. From there, they will decide whether to either repair the appliance/system or replace it altogether.
Remember, you might have to pay a small fee to have someone come to the property, but this is almost always cheaper than the repair or replacement would have cost.
After the claim is reviewed and approved, the home warranty company will take it from there!
Depending on your amount of coverage, you might not have to pay anything. But if your plan only covers up to $2,000 in replacement fees and the total cost will be $2,100 (for example), you will have to cover the $100 difference.
How is a Home Warranty Different From Home Insurance?
The main distinction between a home warranty and home insurance is that home warranties are designed to cover damage from basic wear and tear. In contrast, home insurance is designed to cover damage from unexpected events like fire or theft.
In other words, if your furnace breaks down because it is old, you will probably not be able to get it replaced under a home insurance policy. But if you have a home warranty plan, you may be able to get the furnace repaired or replaced for no additional costs.
What is the Best Home Warranty Company?
We would be lying if we said there was a single “best” home warranty company. Just like any purchase, we recommended you shop around to find the best option for your needs. Different warranty providers will offer different rates and areas of coverage, so be sure to ask a lot of questions and gain a full understanding of what is (and isn’t) covered. Also, be sure to ask about additional fees, so you aren’t blindsided when it comes time to make a claim.
If you’re ready to start shopping, click the link below to get a free home warranty quote.