What is a home warranty?

It happens: You have family coming into town for the holidays or a troop of Girl Scouts coming over for a sleepover. Of course, this is the weekend your dishwasher gives up the ghost.

While your kitchen companion might be frolicking in home-appliance heaven with the dryer that never dried again after an anti-wrinkle cycle last year, you’re in quite the bind. Not only is home appliance repair or replacement expensive, but it’s also time-consuming.

Thankfully, there’s a great solution for just this kind of large expense: a home warranty. What is a home warranty? It’s protection from the natural circle of life that applies to home systems and major appliances.

What is a Home Warranty?

A home warranty is a service contract covering major home systems and appliances. If you have any issues with these systems or appliances malfunctioning from normal wear and tear, a home warranty agreement will cover you.

It’s different from homeowners insurance. Various forms of homeowners insurance cover damage to the household because of a fire, flood, or tree branch falling on the house. A home warranty service agreement does not cover damage from these circumstances.

A dishwasher breaking down one inconvenient day from everyday use is considered normal wear and tear and would be covered. However, if someone put salt in the dishwasher detergent dispenser and it stopped working? This is not normal wear and tear and would not be covered.

What’s Covered by the Warranty Plan?

The main items that are often covered in home warranty plans are major home appliances such as:

• Washer and dryer

• Dishwasher

• Refrigerator

• Oven

• Stove / Cooktop

Major home systems that are often covered by home warranty plans are:

• HVAC system

• Plumbing system

• Electrical system

Curious how much it might cost to update your electrical system? Read more in this post.

Be Sure You Know What’s Covered Under Warranty

It’s important to be clear on exactly what is and what is not included under your home warranty coverage. Generally, as long as your important appliances are working fine when you sign the contract with the warranty company, they should be covered. But details for coverage can vary from company to company and even plan to plan.

Be sure you understand:

• Exactly what’s covered and what’s not (don’t assume every appliance is covered; read the contract carefully and ask warranty company reps to walk you through any coverage questions)

• Possible cap limits on coverage

• Any deductible or trade fee calls (the cost of having a warranty company representative come to your home and assess an issue)

If you have extra appliances, such as a deep freezer in the garage, or special home systems, such as a swimming pool, you may need to purchase a premium or customizable warranty plan and select these specific things for coverage.

Solar panel systems are generally not covered by home warranties. However, solar systems typically include manufacturer warranties and most solar companies, including Vivint Solar, will offer workmanship guarantees on the systems that they install.

Some homeowners insurance companies also cover rooftop solar panels.1 Check your individual policy to be sure of what’s covered under different conditions.2

After you purchase a home warranty, if a home appliance covered under the warranty fails, you can make a claim to your home warranty provider and request to have the appliance repaired or replaced.

Buying or selling a house is a good time to consider buying a home warranty, too. Buyers can rest assured that their home appliances are covered when they move in, and sellers can minimize any post-sale issues with any appliances that were sold with the house.

For more tips on selling a house, see this post on 12 tips to get your house ready to sell.

Endnotes

1 https://www.nationwide.com/solar-panel-insurance.jsp 2 https://www.nrel.gov/docs/fy10osti/46932.pdf