A home isn’t just walls, a yard and a driveway – it’s also all of the expensive and valuable items inside, like refrigerators and air conditioners. And while it’s important to protect one’s home against major unplanned events with home insurance, it is also just as critical to cover the costs of normal wear-and-tear on appliances via home warranties.

What is a home warranty? 

A home warranty is a policy a homeowner pays to reduce the cost of repairs for agreed-upon household appliances. Whenever something needs to get fixed, the homeowner can contact a trusted technician to provide routine service, repairs or even replacements. The list of items a home warranty can cover is quite extensive – some examples include dishwashers, refrigerators, garage door openers, kitchen appliances, air conditioners and washers or dryers. However, a home warranty doesn’t cover everything, as they only apply to items specified in the agreed-upon contract.  

Home warranties do not cover things such as items/appliances that are already broken or installed improperly – likewise, cosmetic issues and plumbing or electrical adjustments that require new items. It’s also important to note that although some home warranty companies cover roof leaks, not all of them do.

Nevertheless, every homeowner should seriously consider obtaining a home warranty – especially when home buying for the first time. Moreover, a home warranty, like homeowner’s insurance, is based on a monthly fee to keep the policy active plus a small fee for claims – it can also get renewed and adjusted each year.  

Difference between home insurance and warranty

Home insurance is the coverage one pays to an insurance company to cover serious accidents, like weather related-disasters. While home insurance is mandatory, a home warranty is at the homeowner’s discretion. Warranties cover individual items that need habitual refurbishment, and insurance protects the home in a broader structural sense. Home insurance covers one’s belongings in the case of an unplanned event like fires, storms or floods – even theft.

Unlike a home warranty, home insurance doesn’t always help the homeowner pay for repairs or replacements unless qualifications get met. Essentially, home warranties cover normal wear-and-tear, and home insurance is for rarer accidents. 

When it’s wise to purchase a home warranty

Recall that it is ideal for first-time homebuyers to buy a one-year home warranty; it will provide much-needed peace of mind and protection against unanticipated, out-of-pocket expenses after moving in. Other times where it is necessary to purchase a home warranty include older homes that often need maintenance. Similarly, it’s a wise practice, in general, to get one, as even the most proactive home upkeep cannot prevent unavoidable breakdowns due to use. 

When looking for the best home warranties, request a quote from as many providers as possible. Likewise, ask for clarification on any plan terms that seem vague or ambiguous – it’s best not to assume what policies mean before discussing with the home warranty companies.

If you are looking to review highly rated home warranty companies, architectural digest provides a well-researched list.   

Need a second opinion?

Speak to your trusted real estate advisor/agent to help you conduct extensive research on warranty companies before selecting one.

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