On average, homeowners spend between 1 and 4% of their homes’ values in repair and maintenance costs annually. While many routine expenses feel manageable, major system or home appliance failures usually mean high price tags. For example, replacing an HVAC unit can cost between $5,000 and $10,000, which is more than many homeowners can afford to send out the door all at once.
As a result, some homeowners may find home warranties appealing, as they can make handling those expenses easier. If you’re new to home warranties, you’re likely wondering what home warranties are for, how they work, and what is covered in these policies. Here’s what you need to know.
What Are Home Warranties For?
Home warranties – which are also referred to as home protection plans – aren’t considered a type of insurance. Instead, they’re service contracts that handle the cost of specific home repairs and home system and appliance replacements. They’re primarily designed to make work related to issues caused by wear and tear easier to manage financially while also addressing areas that aren’t covered by homeowner’s insurance.
How Do Home Warranties Work?
With a home warranty, you start by purchasing coverage. After that, you typically have to wait 30 days after your initial payment before you can use the service contract. Once that time passes, you’ll file a service request or claim when a qualifying system or appliance breaks down.
While the exact process can vary from one company to the next, most have similar steps. After a covered system or appliance breaks down due to wear and tear, you contact the home warranty company by phone or using an online submission form. Provide details about the system or appliance that needs service, and the provider will dispatch a technician to your home.
Usually, the technician arrives within a couple of days, though the exact wait time can vary. Once they get there, they’ll evaluate the system or appliance and determine whether repairing or replacing it is the best choice.
At that point, you’ll typically need to pay any associated service fees. In some cases, the technician can then fix minor issues on the spot if they have the required parts and tools on hand. If not, or if the work is extensive, the company schedules an appointment to handle the rest of the work.
What Do Home Warranties Usually Cover?
As with all types of home-related coverage, what’s covered by home warranties varies from one issuing company to another. Additionally, there are multiple plan types available, each addressing specific issues or concerns.
With a system plan, the home warranties cover whole-home systems. That includes HVAC, plumbing, and electrical, as well as specific related equipment, such as water heaters and ducting.
Appliance plans focus on major appliances. Usually, the coverage extends to stoves, dishwashers, refrigerators, washers, dryers, built-in microwaves, and similar appliances.
Combination plans essentially bring the two coverage types above together, creating a single comprehensive solution. You might also see a la carte-style policies available, allowing you to decide precisely which systems or appliances are included and which are not.
Finally, you’ll commonly see add-ons of specific home features. For example, you might find an add-on for pools or fireplaces, allowing you to get coverage for items or systems that aren’t included in the base policy.
