You may have been offered home warranty coverage as a homeowner. But if you're not familiar with home warranties, you're probably asking, "What is a home warranty?" and wondering what a home warranty covers. Home warranty plans are not the same as homeowners insurance coverage, so it's important to understand what warranty coverage can offer.
What Does a Home Warranty Cover?
Home Systems Covered by a Home Warranty
- Guesthouse or Rental
- Septic and Wells
- Smoke Detectors
Appliances Covered by a Home Warranty
- Air Conditioner
- Built-In Microwave
- Freestanding Ice Maker
- Garage Door Opener
- Garbage Disposal
- Pool and Spa Equipment
- Washer and Dryer
- Water Heater
As a homeowner, you're tasked with lots of new expenses, from paying for a home inspection during the buying process to purchasing home insurance. Although there are a lot of things to add to your budget, you might want to consider making room for a home warranty.
In addition to homeowners insurance, a home warranty can offer you some financial help when things go awry unexpectedly, which can happen at any point of owning a home. Home warranties provide various coverage options for you to fit your plan into your household budget while protecting your air conditioning, plumbing system, and other appliances and systems that become costly to repair.
What Is a Home Warranty?
A home warranty plan provides coverage for specific home systems and appliances that need repair or replacement. Unlike homeowners insurance, a home warranty does not protect against flooding, weather, fires, and other hazards that could damage a home. Instead, the home warranty offers financial coverage for each covered item listed in the policy when it malfunctions or stops working altogether due to regular usage.
As such, home warranty plans can act as a buffer between your home and your wallet. If an appliance, like your refrigerator, stops working, your home warranty policy can offer some or all of the cost to replace it. You'll pay a premium – usually, monthly, bi-annually, or annually – for the policy's coverage.
Some home systems and appliances come with a manufacturer's warranty that's in place for a specific length of time, like one or two years. After that time, your items won't be covered unless you buy an extended warranty or home warranty. With a home warranty coverage, you could have the replacement or repair covered up to a limit set by your home warranty company.
If you buy a home with old appliances or home systems, a home warranty could give you some peace of mind. Even with a basic plan, your home's major systems and appliances could have at least a small coverage limit to help you afford out-of-pocket expenses when you need to repair or replace them.
How Much Does a Home Warranty Cost?
Home warranty premiums vary between home warranty companies and coverages. On average, you can expect to pay between $30 and $75 a month for your premium, although some companies allow you to pay every six months or annually to receive a discount.
Some factors that affect the price of home warranty plans include:
- House size: Larger homes may have more elaborate plumbing systems and more appliances, so your premium could be higher for more square footage.
- Coverages: A warranty company may offer you different coverage options for home systems and appliances, but better coverage may increase your premium.
- Location: Not all home warranty companies offer varied rates in different states or cities, but some do. If you live in a high-claim area, you might have to pay more for your home warranty.
- Eligible discounts: Some home warranty companies, like American Home Shield, offer discounts for covering multiple properties. Others give discounts for purchasing new appliances. These discounts can balance the cost of your premium.
If you're comparing home warranty companies and premiums, also consider the service fee attached to the plan. You'll pay a service fee any time you need to submit a claim or have the company repair or replace an appliance or home system. These typically range from $50-$150, depending on the warranty company or service. A low premium could have a high service fee and vice versa, so be sure that both fit into your budget.
Home Warranty Coverage
Most home warranties can cover home systems or appliance repair or replacement to soften the gaps between your insurance coverage. While your exact coverage can vary with warranty companies and coverage options, expect to find the following home systems and appliances optionally covered by home warranty contracts.
Home Systems Covered by a Home Warranty
Your home's heating, ventilation, and air conditioning system is known as HVAC. Many of the best home warranty company options cover HVAC systems as a whole. Ductwork is a necessary component of a functioning HVAC system, and therefore will be eligible for a covered repair or replacement by most companies.
It's important to note that your company could separate HVAC from ductwork, so don't assume that your ducts are covered just because your HVAC is. This is especially true if you've recently replaced part of your HVAC system but your ductwork is several years old. Also, home warranties might not cover any issue stemming from a failure to perform regular maintenance on your ductwork, such as cleaning registers and taking care of potential pest problems quickly.
Your home's electrical system powers everything from its lights to its appliances. Usually, a home warranty covers problems resulting from normal wear and tear on your electrical system, such as light fixtures needing to be replaced or repair of your water heater.
However, any electrical issues resulting from weather emergencies, light lightning storms causing a power surge, or accidents, such as plumbing leaks, may not have coverage under your home warranty. Some home warranty companies like Cinch Home Services and American Home Shield allow coverage for direct current wiring and built-in exhaust fans and vents.
Guesthouse or Rental
A home warranty can cover a guesthouse on your property to ensure that its systems and appliances stay in good repair. While your homeowners insurance covers the structure itself, your home warranty can offer protection for repairs and replacements of the same appliances and systems as your main home.
Similarly, a rental property you own can get home warranty coverage. Many homeowners choose to add their rental properties to their home warranty plan, which can reduce the monthly premium with bundled discounts. Some companies offer increasing discounts with each property you add to your plan.
Your heating system includes your furnace, ductwork, and heat pumps. If you have a solar energy system, your system also includes solar panels and additional components. The best home warranty companies offer repairs and replacements of heating components in your HVAC system when they fail from normal wear and tear.
However, your plan will probably not cover any heating component that is still under a manufacturer's warranty or an extended warranty. Additionally, any repair that results from a lack of maintenance or proper care, like failing to change air filters routinely, will not be considered a covered repair by your home warranty company.
Homeowners insurance can take care of accidental leaks or plumbing damage in your home, such as a burst pipe that happened suddenly rather than from a lack of maintenance or repair. In contrast, your home warranty may help you pay for the cost to upgrade pipes in your home that need a replacement or fix damaged pipes before they get to the point of bursting.
A home warranty plan might also include reimbursement for plumbing-related fixtures and appliances, such as sink repairs, toilet replacements, or a bathtub leak repair. You could also replace your faucets and vent lines and have a professional clear blocked drains from the tub, toilet, or sink, and get a reimbursement from your home warranty company.
Combined with homeowners insurance, a home warranty can lighten the financial burden of replacing or repairing your roof. Roof coverage is not always an automatically included service, so you'll need to check if your company requires an additional premium to get coverage.
Home warranty coverage for roofs usually includes minor leaks or problems, such as missing shingles or a soft spot in a roof that happened from normal wear and tear. Homeowners insurance typically pays for roof damage caused by severe weather or other accidents.
Your home warranty may only include coverage for areas of the roof that lay over the main living area rather than the roof on a shed, garage, or covered porch. Also, home warranty companies usually don't pay for a complete roof replacement.
Septic and Wells
A septic system is an integral home system for waste management, treating wastewater with a septic tank rather than moving wastewater through a city water management system. A home warranty covers septic systems and wells, to an extent.
Home warranties typically cover septic system problems that occur from regular wear and tear, such as drain blockages or a failed sump pump. However, overgrown roots that damage the septic tank or failures in the system resulting from a lack of maintenance may not make your system eligible for reimbursement if you need a repair or replacement.
Traditional smoke detectors with battery operation are usually relatively affordable to replace. However, a smoke detector system that's hardwired into your home can become more costly to repair or replace. When you need to upgrade or repair your system, a home warranty company can help.
Some home warranty companies can set you up with a service contract technician to diagnose your smoke detectors and repair or replace them, if necessary. Be sure to check them at least every six months to ensure that they're working properly.
Appliances Covered By a Home Warranty
When your air conditioning stops working in the dead of summer, it's crucial to fix it promptly for comfort. A home warranty covers your HVAC system in most cases, so coverage would likely include your air conditioning unit.
Normal wear and tear to your main air conditioning unit can happen, which is why your home warranty company may send a technician to your home to diagnose and repair the issue. If necessary, they can also reimburse you for its replacement up to your allowable amount.
However, most warranties do not include coverage for portable appliances, such as air conditioner window units. Your best bet for these is to get an extended warranty after your manufacturer's warranty runs out.
A countertop microwave is not a covered appliance under most home warranty plans, but a built-in microwave is because it's not considered portable. Like most other appliances, your built-in microwave must experience issues relating to its regular wear and tear rather than a lack of maintenance to be eligible for replacement or repair cost coverage.
Built-in microwaves can be much costlier to replace than countertop models because of their fit. Be sure to check your coverage to find out how much your home warranty company will pay for a repair or replacement. Some might allow $500, while others offer $2,000 or more.
Several things can go awry on a dishwasher with its many mechanical components, even when you use it properly every day. As long as you're maintaining it regularly, your home warranty can help you pay for repairs or a replacement.
Many companies provide different levels of coverage for appliances, including your dishwasher. You could get coverage for an average of $1,000 to $6,000, depending on your company and plan. Expect to pay between $50 and $150 as a service fee for fixing or replacing your dishwasher through your home warranty.
Electronics you use every day, like your computers, smart devices, and TVs, could have protection under your home warranty but may not be included with your basic coverage. Many home warranty companies offer additional electronics protection plans for you to add this coverage to your policy.
Your coverage may protect electronics when they stop working properly due to regular usage or fail because of a power surge. Your warranty may also offer repairs or replacements when issues arise because of a manufacturer's defect. However, electronics with a current manufacturer's warranty are probably not eligible for coverage.
Freestanding Ice Maker
Several companies have additional coverage for freestanding ice makers, including the Home Service Club and Liberty Home Guard. Because these appliances can have a hefty upfront cost, it's important to have a financial buffer in case yours needs to be fixed or get replaced.
Generally, a home warranty will cover all components of your ice maker if the appliance experiences a failure due to regular usage or needs to be repaired or replaced from normal wear and tear. You might notice issues with your ice maker if it starts to make loud noises, isn't producing ice as well as it once was, or has leaks. In many cases, the warranty covers parts and labor costs.
Garage Door Opener
A garage door opener falls under home system coverage with some companies and appliance coverage with others. Still, most companies will help you protect your garage door opener system through home warranty coverage. Signs that yours might need a repair or replacement include unreliable operation, loud noises, or a stalled or stuck door when using the opener.
Replacements for these tools can be as much as $500, while repairs can cost around $150-$200. With your home warranty, you'll just need to pay your company's service fee to get a technician to your home, diagnose the problem, and fix or replace your garage door opener.
Garbage disposals can be around $200-$300 to replace, but with your home warranty, you could just pay about $25-$50 or the cost of your service fee. These important appliances get used frequently in the home, so it's not uncommon for them to break down from regular usage. Slow draining, odd noises, and leaking can signal problems with your garbage disposal.
A home warranty may also include garbage disposal coverage when the appliance breaks down due to an issue with your plumbing. However, exclusions to coverage can apply when you fail to maintain your garbage disposal or use it improperly.
When your oven stops working properly, it can hinder your ability to cook meals in your home. Therefore, this standard appliance usually has protection under a basic home warranty without needing any add-ons. Your warranty should cover the cost of repairing your oven from mechanical issues resulting from regular use or replacement up to a specific cost outlined in your warranty.
This coverage also may include cooktops if they're separate from your oven. Expect to pay between $25 and $100 for your service fee for a company service contractor to diagnose and fix or replace your oven or cooktop.
Pool and Spa Equipment
When your pool or spa gets damaged due to weather or other unpredictable accidents, extra coverage on your homeowners insurance policy should cover them. However, a home warranty can add protection for damage that happens from the usual wear and tear to your pool or spa equipment. Components like the blower motor, pool sweep and pump, and plumbing pipes for your pool or spa can be eligible for coverage through several top home warranty companies.
Heat pumps, lights, jets, and other parts of your pool or spa that are considered "extras" may not be included in your plan. Additionally, most companies only offer home warranty protection for in-ground pools and spas rather than portable, above-ground ones.
With refrigerators typically costing between $1,000 and $2,000, it can help to know that you can offset some of the costs of repairing or replacing yours when you need to. Some home warranties will cover the full price of your refrigerator, should you need to replace it.
Most modern styles of refrigerators can get coverage, including bottom-freezer units and built-in refrigerators. However, not all plans include freestanding freezers.
Washer and Dryer
Did your laundry machine stop working right when you need it most? Unfortunately, these appliances tend to give little warning when they're about to malfunction. You might try to start it as usual and it fails to power on or spin.
A home warranty can help you afford the repair or replacement that might be necessary to get your washer or dryer back in working order. Like most other appliances, your home warranty company will probably have limitations on the number of repairs or replacements you can use per term for your laundry machines. Still, many of them allow up to two for each machine per annual term.
Although your homeowners insurance policy could cover your water heater if it fails due to area flooding or other unexpected events, your home warranty provides coverage for normal wear and tear. Many water heaters only have a lifespan of about 10-12 years, and your home warranty can be there when it's time to repair or replace it.
It's very important to perform regular maintenance on your water heater, though, to make sure it's eligible for coverage. For example, your home warranty company will probably expect you to check the temperature to ensure that it's no hotter than 120 degrees and clean out the sediment build-up when needed.
Home Warranties for Homeowners
A home warranty covers several home systems and appliances you use often. However, your specific coverage depends on your home warranty company and its plans. To personalize your home warranty cost, you can choose to have basic coverage or comprehensive coverage through most companies.
Complete home plans will include most or all home systems and appliances and may even provide coverage for some extras, like a shed on your property or your roof. Other systems, like your pool, spa, or septic pump, could require add-on coverage.
Remember that each repair or replacement you request comes with a connected service fee, which your company will outline in your policy documents. When comparing companies, consider their fees and premiums, and speak with a customer service representative to ask, "What does a home warranty cover with your company?"