13. What Are Home Warranties?

by Local Title

Home warranties are service contracts that cover the repair or replacement of many of the most frequently occurring breakdowns of home appliances and systems. These warranties are designed to protect homeowners from unexpected, potentially costly problems with their home’s essential components.

Understanding Home Warranties

Unlike homeowners’ insurance, which covers damages from accidents or natural disasters, home warranties cover components of the home that fail due to age or normal wear and tear. This can include major systems like heating, electrical, and plumbing, as well as appliances like refrigerators, washers, and dryers. Coverage can vary significantly between different providers and plans, so it’s important to read the details of what each warranty covers and what limitations exist.

How Home Warranties Work

When a covered appliance or system breaks down, the homeowner contacts the home warranty company. The company then sends a technician from its network of professional service providers to assess the issue. If the problem is covered by the warranty, the technician will repair or replace the item. The homeowner pays a predetermined service fee, typically ranging from $75 to $125 per service call, regardless of the actual cost of the repair or replacement.

Benefits and Considerations

The primary benefit of a home warranty is financial protection against unexpected repair costs, which can provide significant peace of mind. For those who are not handy or who do not have a trusted technician, a home warranty can also save time and hassle by quickly providing a reliable service provider. However, home warranties also come with limitations and exclusions. They do not cover pre-existing conditions or damage due to improper maintenance or installation. Additionally, there may be caps on the amount the warranty company will pay out, which could result in out-of-pocket expenses if the cost of a repair or replacement exceeds these limits. Overall, home warranties can be a valuable investment for many homeowners, offering a buffer against the unpredictable expenses that come with home maintenance.