Your home warranty probably won’t leave the fridge door hanging, but the ice maker is another story
Home warranties help cover the cost of system and appliance repair and replacement.
Policies usually cover specific systems, specific appliances, or both.
Basic appliance coverage covers things like your fridge, freezer, and dishwasher.
Basic system coverage covers things like your plumbing, ductwork, or electrical system.
You’ll usually pay monthly or annually for coverage.
Homeownership is a milestone for many, but it’s also unpredictable. Stuff happens, pipes burst, dishwashers leak. A home warranty can help you prepare for the worst by ensuring the worst never actually happens. It’ll help ease the financial burden of replacements and repairs so you can get the work done before there’s a more significant issue. So, what’s included in a home warranty? Here’s what you need to know.
You’re probably not familiar with home warranties as a first-time buyer. A home warranty is a service contract that helps cover the cost of repairs or replacements for significant home systems and appliances. It’s similar to homeowners insurance, but how it helps differs.
Both homeowners insurance and home warranties act as a one-two punch. Home insurance helps cover the damage from a faulty system, like fire damage or water damage. A home warranty will help cover repairing or replacing the defective system itself. For example, maybe a pipe burst and flooded your kitchen, which ruined the laminate floors. Your homeowners insurance would help cover the cost to replace the laminate, while your home warranty would help cover the cost to replace or repair the pipe.
There are a handful of major home warranty companies, including American Home Shield, Choice Home Warranty, and Landmark Home Warranty. You might also find some local home warranty companies while researching. Regardless, they all tend to offer the same types of warranties:
Appliance warranties: Cover select appliances like your fridge or oven
Systems warranties: Cover systems like your ductwork or plumbing
Combination or hybrid warranties: Cover both appliances and systems
Home warranties typically come with a monthly or yearly fee for the policy, plus a service call fee should you need repairs or replacements. A combination policy usually comes with lower premiums than a group of individual policies.
When selecting home warranty coverage, make sure it covers all the appliances you need. Each plan varies, and you might need to add on coverage for finicky or high-cost appliances like jetted tubs, which are prone to breaking down. Home warranty companies offer different tiers of coverage.
Depending on the type of warranty, basic systems coverage may include:
HVAC systems (including central heating, air conditioning, and ductwork)
Electrical systems
Plumbing
Ceiling fans
Water heaters
Re-keying
Garage door openers
Doorbells
Home security systems
Basic appliance coverage from your home warranty company may include appliances like:
Garbage disposals
Refrigerators and freezers
Ranges, ovens, and cooktops
Clothes washers and dryers
Dishwashers
Built-in microwaves
Built-in water and ice dispensers
Toilets
A basic plan won’t cover everything. For example, your refrigerator warranty may not cover the extra fridge you have in the basement or your plumbing warranty may not cover the actual fixture or faucet. In this case, you can opt for enhanced coverage or add-ons. Some additions include:
Spas and jetted tubs
Swimming pools
Well pumps, sump pumps, or drainage systems
Septic systems
Sprinkler systems
Whole-house humidifiers
Faucets and plumbing fixtures
Wine refrigerators
Electronics like TVs, laptops, smart home products, and video game consoles
Additional fridges, freezers, ovens, or air conditioners
Roof leaks
Exterior plumbing
Guest homes
Home warranties have coverage limitations, which are sometimes difficult to understand. For example, your garage door opener might have coverage, but that coverage probably won’t extend to the garage door or track mechanics. Similarly, your plumbing may have coverage, but that coverage doesn’t extend to pipes outside the walls of your home. Policies tend to vary between new and existing homes, and many home warranty companies don’t offer policies that include:
Roof leaks
Solar panels
Commercial-grade appliances and systems
Problems stemming from rust and corrosion
Asbestos, mold, and radon mitigation
Nonessential elements of systems and appliances (like your TV remote or oven rack)
Normal or pre-existing wear and tear
Even if your policy does cover a certain system or appliance, there are usually monetary limits. For example, you might have a $500 cap on replacing a dishwasher and a $1,000 cap for ductwork repairs. You’ll also probably have a maximum limit per period, like $5,000 per item per year or a $15,000 annual cap on all claims. Some things may void your warranty, like:
DIY repairs and installations
Skipping regular maintenance
If the system was previously flagged by a home inspector
If the repair or replacement is used to correct a building or zoning violation
Just like homeowners insurance, it’s important to read the fine print before you take out a plan—and there’s likely a lot of it. Is a home warranty worth it? Research the top-rated home warranty companies near you in your area and weigh the pros and cons.
