What Is a Home Warranty?

A Home Warranty is a service contract, between a homeowner and a home warranty company that provides for discounted repair and replacement service on a home's major components, normally for one year. Understanding how a home warranty works can help homeowners avoid unexpected expenses and provide peace of mind when it comes to protecting essential home systems and appliances.

A home warranty serves as a financial safeguard, covering the repair or replacement of major home components that may break down due to normal wear and tear. However, many homeowners are unsure about what’s covered, how it differs from homeowners insurance, and how to use it effectively. That’s why we’ve put together this guide to help you navigate the details of home warranties so you can make informed decisions and ensure your home is properly protected.

How Does a Home Warranty Work?

Home warranty companies partner with approved service providers to handle covered repairs. The process typically works as follows:

1. A covered item breaks down

2. The homeowner contacts the home warranty company

3. A service provider is dispatched to diagnose the issue

4. If the repair is covered, the provider fixes or replaces the item

5. The homeowner pays only a service fee, rather than the full repair cost

This streamlined approach provides peace of mind and financial protection, ensuring you won’t face hefty repair bills for unexpected breakdowns.

What's Covered?

Coverage varies by provider and plan, so it’s essential to review your home warranty policy to determine:

• Which systems and appliances are included

• Whether the policy covers full replacement costs or just repairs

• Any limitations, exclusions, or service fees

A standard home warranty may cover:

• Plumbing

• Electrical systems

• Furnace

• Water Heater

• Heating Ducts

• Water Pump

• Dishwasher

• Garbage Disposal

• Stove/Cooktop/Ovens

• Microwave

• Refrigerator

• Washer/Dryer

• Swimming Pool (may be optional)

Check your home warranty policy to see which of the following items are covered. Also find out if the policy covers the full replacement cost of an item or just partial/repair.

Home Warranty vs. Homeowners Insurance: What’s the Difference?

Many homeowners confuse a home warranty with homeowners insurance, but they serve different purposes.

A home warranty is not the same thing as homeowners insurance, nor is it a replacement for homeowners insurance.

Homeowners Insurance: Covers major perils such as fire, hail, theft, and water damage that could affect the entire structure and personal belongings.

Home Warranty: Covers specific home components, such as appliances and mechanical systems, that break down due to normal wear and tear.

A home warranty is not a replacement for homeowners insurance - instead, it complements your coverage by handling common repairs and reducing out-of-pocket expenses.

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