What is a Home Warranty & How Do They Work?

A home warranty is a service contract that covers different kinds of repair for appliances and systems in your home that break down from eventual wear and tear.





If you’re thinking of getting a home warranty, then give yourself a pat on the back. A home warranty is a service contract that covers different kinds of repair for appliances and systems in your home that break down from eventual wear and tear. Of course, there are different home warranties in the market, and each of them offer different levels of coverage.

Cheaper home warranties cover the essential repairs and maintenance ranging from a few items or appliances while the more expensive ones can take care of several systems like your HVAC system, plumbing, etc. Sometimes, they even throw in a few more extras like taking care of your garage doors and even your workshop if you have one.

Depending on the amount of money you put in for the warranty, the service can do this all and more. However, that’s just the gist of it. Let’s talk first about what is a home warranty.


What is a home warranty?

A home warranty is a convenient consumer product that you can buy that lets you mitigate any expenses out of your pocket for handling any repairs or maintenance expenses for your appliances and home systems. If you are wondering about the difference between home insurance and a home warranty, take note that home insurance covers expenses in the case of fire, theft, wind, hail, and even vandalism.

It also covers any medical expenses if you’re unlucky enough to have a guest injured when they stay over. In contrast, a home warranty covers any repairs and needed maintenance for any appliance and home systems that malfunction that aren’t covered by your homeowner’s insurance.

Also, it’s a lot easier to get a home warranty than home insurance, not to mention that your real estate agent could choose to recommend a good home warranty company to seal the deal with a house sold.


So how does it work?

If an issue arises from any of your appliance or home systems that are named in your home warranty contract, you can submit a service request to the company you bought the home warranty from, and they will send in a contractor to diagnose, maintain, repair, or even replace the appliance or system if needed. You will then pay a specific fee that is usually between $30 to $125, depending on the company.

The company can then decide to replace the appliance or system with a comparable alternative or choose to provide you with a cash settlement so you can buy it yourself. Although, as mentioned earlier, the appliance or home system should be included in the contract, or they won’t provide any service at all.

Some warranties cover all appliances, and some cover extensive home systems like air conditioning, plumbing, etc. More comprehensive but more expensive warranties cover both. Some warranties even give you some more add-ons like taking care of your septic tank, well pump, etc.




Is it okay for me to buy multiple home warranties?

No, not ever. You see, most companies offer different levels of coverage ranging from just your appliances to all of your appliances and home systems. They usually go from basic warranties to premium warranties, of which the prices will depend on what type of coverage you want to pick which can range to a few thousand dollars to a coverage limit of up to $10,000.

For example, you may want to have some protection for your swimming pool or second TV, which are items not commonly covered in warranties. Some home warranty companies offer this level of coverage, especially in their premium services.


Will every home appliance be covered?

We’re also going to say no on this one. As mentioned earlier, a lot of items can be covered by home warranties, but not all of them. Thus, you can only ask for service for those named items stated in the contract.


Do I need to buy both homeowner’s insurance and a home warranty?

Homeowner’s insurance is mandatory, especially if you’re paying a mortgage. On the other hand, a home warranty is entirely optional. However, having both will provide you greater financial security and financial coverage for your home. Not only that but if you have an older home with old home systems and appliances but don’t have the money to replace them all, having a home warranty is a good way to keep you from spending too much money from your own pocket.


Should you buy a home warranty?

If you’re big on saving money and want financial protection from spending big on appliances and your home systems, then you should buy a home warranty. It’s a cheap and reliable alternative especially if your manufacturers don’t offer repairs and maintenance anymore. Home warranties also take care of finding a contractor to see your appliances or home systems instead of finding them yourself, which is a great convenience.


To Conclude

If your home has a lot of old appliances and a home system, but you’re not ready to replace them just yet but are also afraid of them breaking down any time soon, then having a home warranty taking care of them is optimal.

They are cheaper, and they do the work of finding a good contractor for you to check out the things you need service with. Home warranties may be optional, but they are a good addition to your financial security along with your home insurance.





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