Home Warranties

When writing the contract for a home, you may be asked if you would like to purchase a home warranty. If you’re buying a previously owned home, you might want to consider one. The warranty is designed to cover items in satisfactory, good working condition upon occupancy and then fail due to normal wear and tear.

A home warranty is a service contract that pays the cost of repair or replacement of covered items, such as a leaky roof, septic or well pumps, major appliances, electrical, plumbing, and heating and air conditioning systems. A warranty doesn’t cover windows, doors, floors, walls, or other structural features. Nor does it cover smaller or freestanding appliances or hazard remediation.

Home warranties have limitations in terms of coverage, and the provider can deny claims for many reasons, including improper maintenance. You’ll have to pay a service call fee each time you have an issue. Home warranty companies determine whether to fix or replace a system or an item. If replacing an item, they might go with the cheapest model or one not to your liking.

To decide if a home warranty is right for you, consider whether you already have manufacturer warranties, the age of the home’s systems, and your ability to handle unexpected repairs. As the buyer, always ask the seller what appliances or systems are currently under warranty, either through manufacturers’ warranties or a home warranty plan, and the maintenance history of the home’s major components. If the seller has a home warranty, get the details about the policy so you’ll know when the coverage ends. Home warranties tend to offer broader coverage than a manufacturer’s. They are often good for a longer period and are renewable.

Home warranties and homeowners insurance policies are not the same thing. Unlike a home warranty, homeowners insurance doesn’t cover breakdowns due to normal wear and tear but damage due to a covered event such as fire or theft. Homeowners insurance coverage extends to the structure of the home and is required if you have a mortgage. You are never required to purchase a home warranty.