Understanding Your Home Warranty

*Updated July 8th, 2025

A home warranty can be a valuable investment, offering financial protection for major repairs or replacements of essential home appliances and systems. Whether you’re dealing with a broken HVAC system or a malfunctioning refrigerator, a home warranty—a home warranty is a contract—can provide peace of mind and help you avoid unexpected expenses. However, before committing, it’s crucial to understand exactly how a warranty works and what it covers—and what it doesn’t.

Just like insurance, no two home warranties are alike. Each service contract comes with its own terms, limitations, and exclusions. It’s vital to read the fine print and ask key questions. Some coverage plans are comprehensive, covering a wide range of systems and appliances, while others are limited, leaving potential gaps. By evaluating your home’s specific needs and comparing costs, you can choose a home warranty plan that aligns with your budget and ensures adequate protection.

How Home Warranties Work

A home warranty is a service contract—a promise from a warranty provider to cover repair or replacement costs for covered appliance or system failures. This is different from homeowners insurance, which protects against structural damage from disasters.

Home Warranty Coverage

A typical home warranty plan covers major appliances and home systems that fail from normal wear and tear. The plan may also offer optional coverage for extras like septic tanks or pool equipment. What systems and appliances are included varies by provider—some cover the HVAC and plumbing, others focus on the kitchen appliances and home system components.

How Home Warranties Work in Practice

When something breaks:

1. You file a claim with the home warranty provider.

2. You pay a service fee (usually $75–$150).

3. The provider sends a technician to your home to diagnose the problem.

4. They either cover repair or replacement based on the coverage limits in your warranty contract.

Because a home warranty is a contract, you need to read the terms and conditions carefully to understand what’s covered—and what isn’t.

Getting a Home Warranty & Cost Considerations

Buying a home warranty is simple—you can get a home warranty when purchasing a home or anytime later. A home warranty is worth it if you want budget protection from repair costs. Plans include:

• Coverage for appliances in your home or home systems.

• Home warranty cost depends on coverage level, service fee, and provider.

• On average, plans are $40–$60 per month, plus service fees each repair visit.

Home Warranty vs. Homeowners Insurance

A home warranty vs. homeowners insurance—what’s the difference?

• Homeowners insurance covers structural damage from disasters or theft.

• A home warranty covers the failure of systems and appliances from regular use.

If your air conditioner breaks down, that’s a home warranty claim—not a homeowner’s insurance claim.

What Warranty Covers & What It Doesn’t

Home warranties typically cover:

• HVAC systems, plumbing, electrical systems

• Kitchen appliances (refrigerator, oven, dishwasher)

• Water heater, garbage disposal, ceiling fans, garage door opener

But they don’t cover:

• Pre-existing conditions

• Items not properly maintained

• Damage caused by natural disasters

• Roof leaks or structural issues (unless you buy additional coverage)

• Manufacturer’s warranty still in effect

Choosing a Home Warranty Provider

To select a home warranty:

• Compare home warranty companies by reputation and coverage options

• Check coverage limits, pricing, and service fees

• Make sure contractors are licensed and insured

• Read the warranty contract for all terms and exclusions

Is a Home Warranty Worth It?

Most homeowners find home warranties worth the cost if they value predictable repair expenses and reduced stress. It’s especially useful for first-time home buyers or those with aging appliances and systems. It’s about avoiding surprise bills and getting reliable repairs or replacements quickly.

FAQ

Does a home warranty cover the roof?
No—roof leaks aren’t typically covered unless you buy extra roof protection.

Can I file a claim immediately?
Not usually—most home warranties have a 30-day waiting period before coverage starts.

Is it a write-off?
Generally no, unless it relates to a home-based business.

Final Thoughts

A home warranty—a warranty is a service contract for your systems and appliances—can help you avoid big repair bills and simplify maintenance. By understanding how home warranties work and choosing the right coverage, you can enjoy peace of mind and protect your budget. Whether you’re buying a home or safeguarding your existing one, a well-chosen home warranty plan is a smart, practical investment.

Additional Home Warranty Resources

• Does Your Home Warranty Cover Roof Leaks?
• Home Warranty Cost Guide
• The Top Benefits of a Home Warranty