Home warranty plans help protect your investment and your wallet. If you’re building a new home, the builder may have this covered. Otherwise, you’ll have to do the legwork to find a plan that suits your needs and your budget. Keep reading to learn more about home warranties, how they work, what they cover, and what to expect when filing a claim.

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How Do Home Warranties Work?

These plans are designed to cover the cost of repairs associated with appliances and major systems in your home. Home warranty plans can be customized to fit your needs. However, the premiums will depend on the type of plan you choose and the appliances and systems covered.

How to Initiate a Claim

The way in which you file claims will vary by company. In most instances, you’ll need to reach out via phone or submit a ticket online to report the issue. Next, the insurer will set up an appointment for a service provider to examine the issue and make repairs.

If they’re unable to repair the appliance or system, it could be replaced at no additional charge to you. (Note: this also varies by plan).

Depending on your contract, you may be responsible for covering a percentage of the cost of the service call, usually in the form of a flat (or trade call) fee. This amount should be listed, by appliance or system and repair type, in the original agreement.

What Do Home Warranties Cover?

Most home warranty plans include coverage options for:

  • Air conditioning systems
  • Heating systems and furnaces
  • Doorbells and ceiling fans
  • Electrical systems
  • Kitchen appliances, including built-in microwave, dishwasher, refrigerator, garbage disposal, range and over
  • Hot water heaters
  • Plumbing systems
  • Telephone wiring
  • Toilets
  • Washers and dryers

Because coverages vary by plan, it’s best to check plan details to determine which systems and appliances are covered, and which aren’t.

Quick note: if you have more than one of a particular appliance, like a built-in kitchen on your patio, it may be necessary to purchase supplemental coverage.

What’s Not Covered Under Home Warranty Plans?

It depends on the plan you select. However, most home warranty plans don’t cover pre-existing issues or malfunctioning systems or appliances that weren’t installed correctly. Your claim may also be denied if the issue is related to poor maintenance.

Are Home Warranty Plans Expensive?

On average, home warranty plans range between $300 and $600 for a year of coverage. Payments are typically due monthly or annually.

Isn’t It Cheaper to Just Use Homeowner’s Insurance?

Not necessarily. Homeowners insurance doesn’t cover issues related to appliances and systems from wear and tear. Their coverage is applicable to damages sustained from natural disasters, inclement weather, fires, burglary, and theft.

Quick note: if you’re moving into a new home, the major systems and appliances may be covered under the manufacturer’s warranty. Reach out to the builder to inquire.

How Do I Purchase a Home Warranty Plan?

You’ll want to shop around to compile a list of options. Start your search online or ask your realtor, family, or friends that are homeowners and currently have home warranty plans for recommendations.

Reputable providers include Choice Home Warranty and Advanced Home Warranty. You can view a comprehensive list of top home warranty plan providers here.

Once you’ve selected a provider that suits your needs, apply for coverage and remit payment when your application is approved. The plan will be valid for a year and can be renewed when it expires. Also, keep in mind that an inspection probably won’t be necessary to secure coverage.

Are Home Warranty Plans Transferable?

If you want to sell your home and your plan is still valid, you may be able to transfer it to the new owners. And even if you don’t have a home warranty plan and are looking to sell in the near future, securing a plan may be a worthwhile purchase to make your home more attractive to potential buyers.

How to Evaluate Home Warranty Plans

Before purchasing a plan, consider the following factors to find the best fit:

  • Claims process: Is the process straightforward? How much time does it take to initiate a claim, and are there representatives standing by 24/7 to assist you?
  • Coverages and exclusions: Does the provider offer coverage on all the major systems and appliances in your home, or will you have to purchase supplemental or upgraded coverage?
  • Cost of premiums and trade fees: Is the monthly or annual premium similar to what you’d find from other providers? Are the trade fees affordable?
  • The reputation of the provider: Is the home warranty provider accredited by the Better Business Bureau? What rating did they receive, and what are customers saying about them? You can also check with your state insurance commissioner to learn more about the insurance company you’re considering. (Unfortunately, some providers are shady and charge very low premiums, only to vanish into thin air when you contact them to file a claim).

Most importantly, don’t sign without reading the fine print to confirm that the terms of the actual plan documents are identical to the quote.

Bottom Line

Coupled with routine maintenance, home warranty plans are well worth the investment. You can save yourself hundreds, if not thousands, on repairs should issues arise with your systems or appliances later on down the line.