What is a Home Warranty and How Does it Work?
A home warranty is a service contract that covers the repair or replacement of appliances and home systems that break down over time. From air conditioning systems to kitchen appliances, our plans help cover damage and malfunction caused by everyday wear and tear. When something that is covered by our home warranty contract breaks down, the homeowner puts in a Service Request Ticket with us and then selects a licensed service provider of their choice to examine the problem. If it’s determined that the needed repair or replacement is covered by the warranty, we will authorize the contractor to complete the work. As a covered homeowner, you only pay a small service call fee, similar to a deductible.
Benefits of a Home Warranty
A home warranty is typically purchased to protect against expensive, unforeseen repair bills and provide peace of mind, knowing that repairing or replacing covered appliances and home systems will not break the budget. For those on a fixed income, a home warranty plan can be a useful budgeting tool. For homeowners who don’t have an emergency fund or who want to protect their emergency fund, a home warranty can act as a safeguard. Home warranties also make sense for people who aren’t handy, lack expertise or who don’t have the time to fix a home system or appliance when it breaks down.
Home Warranty for Home Buyers
The subject of home warranties often comes up during the sale and purchase of a home. A home warranty can provide reassurance to a homebuyer who has limited information about how well the home’s components have been maintained, or how well they have been installed, in the case of new construction. A home warranty can also be helpful for someone who has just depleted their savings to buy a home and wants to avoid any additional major expenses.
Home Warranty vs. Homeowners Insurance
A home warranty is different than homeowners insurance. Homeowners insurance protects your home from future unexpected perils like fires, theft or natural disasters. A home warranty will protect you and your budget from the unexpected expenses required to repair or replace home systems or appliances when they break down.
Home Warranty vs. Manufacturer’s Warranty
A manufacturer’s warranty typically covers the failed part of a single appliance or system, but it doesn’t usually cover the cost of the labor or repair. Additionally, a manufacturer’s warranty is designed to cover factory defects of a new product. It is of limited duration, normally for a period of up to one year, when the appliance or home system is less likely to malfunction or break.
With a home warranty, one plan covers multiple home systems and/or appliances regardless of their age or usage. This can be a more cost-effective way to protect components of systems and appliances in your home as well as your wallet.