Home Warranty: What Is It and How Does It Work?

EllaAugust 27, 2023Last Updated: June 25, 2024

54 5 minutes read

If you own a home, you probably know that maintaining it can be costly and stressful. Home systems and appliances can break down due to normal wear and tear, leaving you with unexpected and expensive repair or replacement bills. Homeowners insurance usually does not cover these types of expenses, unless they are caused by a natural disaster or an accident. That’s why many homeowners opt for a home warranty, a service contract that covers the repair or replacement of major home items that malfunction due to normal use. In this blog post, we will explain what a home warranty is, how it works, and what are the benefits and drawbacks of having one.

What Is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of major home systems and appliances that break down due to normal wear and tear. A home warranty company will charge you a monthly or annual fee, and in exchange, it will send a pre-screened and licensed contractor to diagnose and fix the problem when you file a service request. A home warranty can cover items such as plumbing system, electrical system, heating and cooling system, water heater, oven, refrigerator, dishwasher, washer, dryer, and more.

A home warranty is different from homeowners insurance, which covers your home’s structure and belongings in the event of a fire, storm, flood, or other accident. A home warranty also differs from a manufacturer’s warranty, which covers only specific parts or defects of a product for a limited period of time. A home warranty covers the whole system or appliance regardless of its age or brand, as long as it is in good working condition when the contract starts.

How Does a Home Warranty Work?

The process of getting and using a home warranty is relatively simple. Here are the steps:

Choose a plan: You can choose from different plans offered by various home warranty companies. Each plan has different coverage options, prices, service fees, and terms and conditions. You can compare different plans online or by contacting the companies directly. You can also customize your plan by adding optional items that are not included in the basic coverage.
Pay the fee: You can pay the fee monthly or annually, depending on your preference and the company’s policy. The fee can range from $300 to $600 per year for basic plans, and from $500 to $1000 per year for more comprehensive plans. You may also get discounts or promotions if you are a new customer or if you pay annually instead of monthly.
Request service: If a covered item breaks down due to normal wear and tear, you can contact the home warranty company by phone or online to request service. You can do this 24/7, any day of the year. The company will assign a contractor from its network to handle your request within four hours during business hours or within 48 hours during weekends or holidays.
Pay the service fee: The contractor will contact you to schedule an appointment and arrive at your home to inspect the item. You will have to pay a service fee for each service request, which is usually between $75 and $125. This fee is fixed regardless of the type or extent of the repair or replacement.
Repair or replace: The contractor will confirm that the item is covered by your plan and diagnose the problem. If the item can be repaired, the contractor will fix it on the spot or order parts if needed. If the item cannot be repaired or if it is more economical to replace it, the home warranty company will authorize a replacement based on its terms and conditions.

What Are the Benefits and Drawbacks of Having a Home Warranty?

A home warranty can have many benefits for homeowners, such as:

Saving money: A home warranty can save you from paying out of pocket for expensive repairs or replacements of your home items. According to MarketWatch, home warranty companies have saved their customers over $3 billion in repair costs since 2016.
Saving time: A home warranty can save you from spending time searching for reliable and trustworthy contractors to fix your home items. The home warranty company will do that for you and send you a pre-screened and licensed contractor from its network.
Saving hassle: A home warranty can save you from dealing with multiple contractors, invoices, warranties, and disputes when you have multiple issues with your home items. The home warranty company will handle all that for you and provide you with one point of contact.
Having peace of mind: A home warranty can give you peace of mind knowing that you have coverage for most of your home items and that you can rely on the home warranty company to provide you with quality service whenever you need it.

However, a home warranty can also have some drawbacks, such as:

Having limitations: A home warranty does not cover everything in your home. It only covers items that are specified in your contract and that break down due to normal wear and tear. It does not cover items that are damaged by misuse, abuse, neglect, improper installation, or natural disasters. It also does not cover items that are still under the manufacturer’s warranty or that are not in good working condition when the contract starts.
Having exclusions: A home warranty may have exclusions or limitations on the coverage of certain items or parts. For example, some home warranty companies may not cover items such as faucets, shower heads, knobs, doors, windows, or cosmetic defects. Some may also limit the amount or frequency of repairs or replacements for certain items or parts.
Having disputes: A home warranty may have disputes or disagreements with the contractor or the customer over the coverage, diagnosis, repair, or replacement of an item. For example, the contractor may claim that the item is not covered by the plan or that it needs to be replaced instead of repaired. The customer may disagree with the contractor’s assessment or quality of work. The home warranty company may have to intervene and resolve the issue according to its terms and conditions.

Conclusion

A home warranty is a service contract that covers the repair or replacement of major home systems and appliances that break down due to normal wear and tear. A home warranty can provide many benefits for homeowners, such as saving money, time, hassle, and peace of mind. However, a home warranty can also have some drawbacks, such as having limitations, exclusions, and disputes. Therefore, homeowners should carefully compare different plans and companies before choosing a home warranty provider that suits their needs and budget.

One of the best home warranty providers in the industry is Choice Home Warranty. Choice Home Warranty offers comprehensive and flexible plans that cover most essential home items, as well as excellent customer service, fast response time, and a network of over 15,000 qualified service providers. Choice Home Warranty has received numerous awards and recognition from various sources, such as the People’s Choice Award by HomeWarrantyReviews.com, the Editors’ Choice Award by U.S. News & World Report, and an A- rating by Better Business Bureau. If you are looking for a home warranty provider that can protect your home and save you money from unexpected and costly repairs or replacements, Choice Home Warranty is a top choice for you.