Residential Real Estate:

Home Warranty Policies

A home warranty is an insurance contract that covers the repair and replacement costs of home appliances. The warranty generally covers equipment and appliances such as dishwashers, plumbing systems, electrical systems, etc. but the coverage varies significantly across warranty companies.

Home warranty policies typically typically range from $250 to $400, depending on coverage. Home warranty companies sometimes run special sales and either discount policy prices or offer additional coverage for the same price. The policies are prepaid for a year in advance, at which time they expire or can be renewed.

Specific plans provide for specific types of coverage, but most operate the same way:

  • If a home system or appliance breaks or stops working, the home owner calls the home warranty company.

  • The home warranty company calls a provider with which it has a business arrangement.

  • The specific provider calls the home owner to make an appointment.

  • The specific provider calls the home owner to make an appointment.

  • The provider fixes the problem. If an appliance is malfunctioning and cannot be repaired, depending on contract coverage, the home warranty company will pay to replace and install the appliance.

  • The home owner pays a small trade service fee (less than $100).

What is Covered:

  • Air conditioning
  • Dishwashers
  • Doorbells
  • Furnace / heating
  • Water heater
  • Ductwork
  • Garbage disposal
  • Inside plumbing stoppages
  • Ceiling fans
  • Electrical systems
  • Range and oven
  • Telephone wiring

What is Not Covered:

  • Outdoor items such as sprinklers
  • Faucet repairs are not covered under all plans
  • Not all plans pay for refrigerators, washers & dryers or garage door openers
  • Spa or pools, unless specific coverage requested
  • Permit fees
  • Haul aways

All plans differ, so you will want to ask specifically what is covered. Ask your real estate agent if upgrades are available. Pay close attention to whether the home warranty company will pay for repairs to make certain types of systems or appliances compliant with new regulations.