Home Warrantys: What They Are, How They Work, and Why You Might Need One
Homeowners know how expensive and stressful it can be to deal with unexpected home repairs. Whether it’s a broken air conditioner, a leaking water heater, or a faulty dishwasher, these issues can disrupt your daily life and put a dent in your budget. That’s why many homeowners choose to purchase a home warranty, which 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.
In this article, we will explain what a home warranty is, how it works, and why you might need one. We will also compare some of the best home warranty companies of 2023 based on their features, benefits, plans, pricing, and customer satisfaction.
What is a Home Warranty?
A home warranty is not the same as homeowner’s insurance, which primarily pays for unexpected property damage due to weather or disasters. A home warranty covers the items that, for the most part, will eventually fail due to age or usage.
A home warranty is a service contract that you pay for either monthly or annually. In exchange, the home warranty company agrees to cover the cost of repairing or replacing certain home systems and appliances that break down due to normal wear and tear. These may include:
- Heating and cooling systems
- Plumbing and electrical systems
- Kitchen and laundry appliances
- Garage door opener and ceiling fans
- Pool and spa equipment
- Well pump and septic system
The exact coverage of a home warranty depends on the plan you choose and the company you buy it from. Some companies offer more comprehensive and flexible coverage than others. Some also offer additional benefits such as power surge protection, no lemon policy, spoiled food reimbursement, preventative maintenance parts reimbursement, cosmetic parts reimbursement, no service claim reward, and transferability.
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How Does a Home Warranty Work?
When you buy a home warranty plan, you will receive a policy brochure that lists the covered items and the terms and conditions of the service contract. You will also receive a policy number and a customer service phone number or website.
When one of your covered items breaks down or malfunctions due to normal wear and tear, you can file a claim with the home warranty company either online or by phone. You will need to provide your policy number and some information about the problem and the item that needs service.
The home warranty company will then assign a local contractor who is licensed and insured to service your claim. The contractor will contact you to schedule an appointment and come to your home to diagnose your covered item. The contractor will determine if the item can be repaired or needs to be replaced.
If the item can be repaired, the contractor will fix it on the spot or order any necessary parts. If the item needs to be replaced, the contractor will inform the home warranty company, who will approve or deny the replacement based on their actual cost (which at times may be less than retail) to repair or replace any covered system, component or appliance. If approved, the home warranty company will either send you a new or refurbished item of equal or better features and functionality, or offer you cash back in lieu of repair or replacement.
You will only pay a service call fee for each repair or replacement. The service call fee is usually between $75 and $125 depending on your plan and company. You will not pay any other fees or charges for covered items.
Why Do You Need a Home Warranty?
A home warranty can be a worthwhile investment for homeowners who want to protect their home systems and appliances from unexpected failures and breakdowns. A home warranty can provide you with:
- Peace of mind: You don’t have to worry about finding a reliable contractor or paying for expensive repairs or replacements when your covered items break down.
- Budget protection: You can avoid unexpected expenses and save money on repairs or replacements that could otherwise cost hundreds or thousands of dollars.
- Convenience: You can request service online or by phone anytime 24/7, and receive prompt and professional service from a local contractor.
- Quality: You can expect quality workmanship from licensed and insured contractors who are screened and approved by the home warranty company.
- Guarantee: You can benefit from a workmanship guarantee that ensures that if the same problem occurs again within a certain period of time (usually 30 to 90 days), the home warranty company will send another contractor to fix it at no additional cost to you.
A home warranty can be especially useful for:
- New homeowners: If you have recently bought a new home, you may not know the condition or history of its systems and appliances. A home warranty can cover any defects or malfunctions that may arise after you move in.
- Older homeowners: If you have an older home with aging systems and appliances, they may be more prone to breakdowns. A home warranty can cover any repairs or replacements that may be needed due to normal wear and tear.
- Busy homeowners: If you have a hectic schedule and don’t have the time or skills to deal with home repairs, a home warranty can save you time and hassle by providing you with a convenient and easy service process.
- Landlords: If you own a rental property, a home warranty can protect you from paying for repairs or replacements that your tenants may cause or request. A home warranty can also make your property more attractive and competitive in the rental market.
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Best Home Warranty Companies of 2023
There are many home warranty companies in the market, but not all of them are created equal. There are many factors to consider when choosing the best home warranty company for your needs, such as:
- Coverage options: What items are covered by the plan? How comprehensive is the coverage? Are there any exclusions or limitations?
- Pricing: How much does the plan cost per month or per year? How much is the service fee or deductible? Are there any discounts or promotions available?
- Service quality: How easy is it to request service online or by phone? How fast is the response time and the repair process? How qualified and reliable are the contractors? How long is the workmanship guarantee?
- Customer satisfaction: How transparent and trustworthy is the company? How responsive and helpful is the customer service team? How positive are the customer reviews and ratings?
To help you make an informed decision, we have reviewed and compared some of the top home warranty companies of 2023 based on these criteria. Here are our findings:
| Company | Rating | Features | Benefits | Plans | Pricing |
|---|---|---|---|---|---|
| Choice Home Warranty | 4.8/5 | Covers up to 20 home systems and appliances, plus optional coverage for extra items. Offers lower-than-average service fees ($85) and longer-than-average service guarantees (90 days). | Provides excellent customer service and support, with a 24/7 claims hotline, a network of licensed and insured contractors, and a fast and hassle-free service process. Has an A rating from the Better Business Bureau and thousands of positive reviews from customers. | Offers two plans: Basic Plan (appliances only) and Total Plan (systems and appliances). | Basic Plan: $55 per month or $660 per year. Total Plan: $60 per month or $720 per year. |
| Liberty Home Guard | 4.8/5 | Covers up to 20 home systems and appliances, plus optional coverage for extra items. Does not have an age limit on covered appliances and does not require any home inspection or maintenance records prior to coverage. | Provides outstanding customer service and support, with a 24/7 claims hotline, a network of vetted and background-checked contractors, and a prompt and courteous service process. Has an A+ rating from the Better Business Bureau and thousands of positive reviews from customers. | Offers three plans: Appliance Guard Plan (appliances only), Systems Guard Plan (systems only), and Total Home Guard Plan (systems and appliances). | Appliance Guard Plan: $66.66 per month or $799.99 per year. Systems Guard Plan: $69.99 per month or $839.88 per year. Total Home Guard Plan: $74.99 per month or $899.88 per year. |
| American Home Shield | 4.7/5 | Covers up to 21 home systems and appliances, plus optional coverage for extra items. Allows you to customize your plan by choosing your own coverage items from a list of systems and appliances. Also allows you to choose your own service fee ($75, $100, or $125) to adjust your monthly or annual premium. | Provides good customer service and support, with a 24/7 claims hotline, a network of experienced and reputable contractors, and a quality service process. Has a B rating from the Better Business Bureau and thousands of positive reviews from customers. | Offers four plans: Systems Plan (systems only), Appliances Plan (appliances only), Combo Plan (systems and appliances), and Build Your Own Plan (customized coverage). | Systems Plan: $49.99 per month or $599.88 per year. Appliances Plan: $49.99 per month or $599.88 per year. Combo Plan: $59.99 per month or $719.88 per year. Build Your Own Plan: $64.99 per month or $779.88 per year. |
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 you with peace of mind, budget protection, convenience, quality, and guarantee when you face unexpected issues with your heating, cooling, plumbing, electrical, kitchen, laundry, and other items in your home.
However, choosing the best home warranty company can be challenging, as there are many factors to consider, such as coverage options, pricing, service quality.
