What Does a Home Warranty Not Cover?
While a home warranty can offer comprehensive coverage, it doesn’t protect everything. Here are a few coverage exclusions found in many home warranty contracts.
- Appliances or systems with pre-existing conditions at the time of requested service
- Damage to items caused by improper installation or maintenance
- Issues stemming from appliance or system misuse
- Cosmetic issues on systems and appliances.
Before purchasing coverage, talk with a customer service representative about protections and exclusions. You can also read a sample contract to learn about each plan’s coverage details. The contract will list any coverage exclusions while helping you parse out the best home warranty companies from the worst ones.
Home Warranty vs. Home Insurance
Often, new homeowners confuse home warranty and home insurance policies. The latter covers damages caused by natural disasters or catastrophes, such as a fire or hailstorm, while a home warranty covers repairs or replacements to systems and appliances that break down due to normal wear and tear. Most lending partners require home insurance, but you don’t need a home warranty to get a loan for your new home.
Claims for Home Warranties
Most home warranty providers have a 30-day waiting period, during which you’re unable to file a claim. After the period is up, most companies allow you to file claims 24/7 via a customer support number or online portal.
After a claim is filed and processed, a service contractor from your provider’s network of vetted professionals is sent to address your issue. Your technician will assess the problem during the service call and schedule a future repair or replacement if necessary.
Home Warranty Replacement Cost
At the time of your service call, you’ll owe the technician a deductible, which is typically between $75 and $125. While this usually covers the replacement cost, it’s important to understand the fine print in your contract. For example, coverage limits for an appliance replacement typically range from $1,500 to $3,500, meaning that if the replacement costs more than this, you’ll owe the difference.
What Does a Home Warranty Cost?
The cost of a home warranty varies based on the provider you select. However, you can think of your plan as the sum of two costs: your monthly premium and service fee, or deductible.
Based on our sample quotes from top providers in the Atlanta area, as an example, customers can expect to pay between $35 and $55 per month for one year. Some providers offer a discount if you choose to pay for your plan in one lump sum or extend it to a multi-year contract.
What Does a Service Fee Cost?
Based on our sample quotes from top providers in the Atlanta area, customers can expect to pay between $75 and $125 for their plan’s service fee. It’s important to note that the higher the service fee, the lower your monthly premium. If you choose a lower service fee, your monthly premium will increase.
When Do You Need a Home Warranty?
Home warranties are particularly beneficial to homeowners with major appliances and systems with expired manufacturer warranties. If you fall into one of the below categories, a home warranty can also be especially helpful.
- First-time home buyers: A home warranty can help if this is your first home and you have less experience in home repairs and are unaware of reliable contractors in the area. Additionally, first-time homeowners might have limited emergency funds to deal with issues that may arise.
- Owners of older homes: Older homes tend to have systems and kitchen appliances that are likely to break down.
- Hands-off homeowners: A home warranty might suit you if you don’t want to deal with tools and would prefer to leave repairs or replacements to professionals.
- Prospective sellers: Current homeowners looking to sell their homes can purchase a transferable home warranty to incentivize potential buyers. Some homeowners even sweeten the deal by offering to purchase a one-year home warranty for potential buyers.
The Bottom Line: Do You Need a Home Warranty?
A home warranty offers peace of mind by covering essential appliances or systems that break down in your home. This coverage takes the stress of scheduling a repair or replacement off of your hands, giving you access to vetted technicians in your area who can get your item back up and running in a timely manner.
If you’re interested in a home warranty, we recommend looking into American Home Shield, Liberty Home Guard, and Select Home Warranty. All three providers offer comprehensive coverage at affordable rates while maintaining near nationwide availability.
Specifically, American Home Shield tops our list of recommended providers. It has generous coverage limits, flexible plan options and a free cancellation period. Liberty Home Guard has unique add-on options and a 24/7 live chat to contact customer service. Select Home Warranty offers plans for less than $50 per month, all of which include free roof-leak protection up to $400 annually. No matter which company you go with, it’s important to get free quotes from multiple providers to compare costs and coverage details.