Home > What Does A Home Warranty Cover?

What Does A Home Warranty Cover?

Written by: Britt Olizarowicz

Edited by: Andrew Dunn

 

Jump to: Best Companies | Coverage Quality | What Does A Home Warranty Cover? | What’s Not Covered | Types of Coverage | Types of Homes Eligible for Coverage | When Does Coverage Begin? | How Long Does HW Coverage Last? | Compare Companies | Conclusions | Best Coverage | Final Notes

Maintaining your home can be stressful. Your house has so many moving parts, and any one of them is liable to break down – usually at the most inconvenient time. A home warranty can help you manage all of your home’s systems and appliances, keeping them in good working order and paying to fix them when they go bad.

But home warranties don’t protect absolutely everything in your home, and different home warranty plans will have varying lists of what they will and will not cover. Before investing in a home warranty, it is essential to exactly what your plan will provide. 

While coverage options are different from one provider to the next, there is much that most plans have in common. In this article, we’ll go through the items that most home warranty plans cover, the things most plans omit, and what to watch carefully while shopping for a plan.

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Total Home Guard plan
Level:
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Type:
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$75
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Level:
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Deductible
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What is a Home Warranty?

A home warranty is a protection plan for your home systems and appliances. “Systems” refers to things like your house’s electrical, plumbing and HVAC, while appliances are things like your refrigerator, dishwasher and range.

You pay your home warranty provider a monthly or annual fee, and in exchange, the warranty company agrees to help pay to repair or replace your system or appliance when it breaks. In most cases, the home warranty provider will send a technician to your home to complete the job for you.

As you shop for a home warranty plan, there are three big categories that separate one plan from another. Price is important, but it’s nearly impossible to compare plans without keeping these three areas in mind.

  • Coverage caps. Home warranty coverage is typically not unlimited. There’s a maximum amount your provider will pay to repair or replace a single item – a total known as the coverage cap. You’re responsible for paying the difference between the total cost of the repair or replacement and your coverage cap. Higher coverage caps mean more protection for your wallet and more peace of mind as you make your budget. Coverage caps can range anywhere from $500 to $7,000 for different items in your plan.
  • Service fee. Each time you file a claim with your home warranty, you’ll need to pay a fee to have a technician sent to your home. These fees typically range between $60 and $150. Some providers will give you the option to choose a service fee, though lower fees typically result in higher monthly prices. 
  • Coverage features. This refers to the actual list of systems and home appliances your plan covers. For instance, your plan could cover your refrigerator but not your ice maker, or the heating system but not the electrical. 

It’s this last category that we’ll dive into through this article.

Home Warranties vs. Homeowners Insurance

Another crucial thing to keep in mind is the difference between a home warranty and homeowners insurance. While they sound similar, they’re actually very different.

Your homeowners insurance primarily protects your home against damage from natural disasters and sudden catastrophes like house fires and break-ins. It also covers you against certain lawsuits, like if somebody were to be injured while visiting your home. If you have a mortgage, your lender likely requires you to carry a homeowners insurance policy to protect your investment. 

A home warranty, on the other hand, deals with problems caused by normal wear and tear. Together, they offer protection for most repair issues your house could face. A home insurance policy does not care if your microwave stops working, but your home warranty does. And your home warranty policy can’t do anything if a hurricane or windstorm damages your house, but your homeowners insurance policy will.

Home warranty

Homeowners insurance

Optional

Required

Requires you to pay a service fee

Requires you to pay a deductible

Pays for damage caused by normal wear and tear

for damage caused by natural disasters and sudden catastrophes

Covers household appliances and systems

Covers the structure of the home and personal effects inside it

Costs $300 to $1,000 a year on average

Costs $1,200 to $3,000 per year on average

Not considered an insurance product, or associated with insurance providers

Insurance policy that can be bundled with other products