Home Warranties 101: How to Choose the Right Plan and Know What’s Really Covered

Buying a home is one of the largest investments you’ll ever make—and while homeowners insurance protects you from unexpected disasters, it doesn’t help when your air conditioner stops working in July or your dishwasher gives up mid-cycle.

That’s where a home warranty comes in.

A home warranty can be an affordable way to safeguard your budget from surprise repair costs, but not all plans are created equal. Understanding how home warranties work—and what they actually cover—can help you choose a plan that makes sense for your home, lifestyle, and budget.

What Is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of major home systems and appliances due to normal wear and tear. Unlike homeowners insurance, which covers damage from events like fires or storms, a home warranty focuses on the mechanical breakdown of household items you rely on every day.

Most homeowners choose a home warranty for peace of mind, especially during the first year of homeownership, when unexpected repair costs can feel particularly overwhelming.

What a Home Warranty Typically Covers

Coverage varies by provider, but most standard home warranty plans include:

1. Major Home Systems

These are often the costliest repairs:

• HVAC systems (heating and air conditioning)
• Electrical systems
• Plumbing systems
• Water heaters
• Ductwork

2. Household Appliances

Most plans also cover common kitchen and laundry appliances, such as:

• Refrigerators
• Ovens and cooktops
• Dishwashers
• Washers and dryers
• Built-in microwaves

3. Optional Add-Ons

Depending on your needs, you can often add coverage for:

• Pools and spas
• Septic systems
• Well pumps
• Roof leaks
• Standalone freezers
• Luxury appliances

Always read the fine print to understand coverage limits and exclusions.

What’s Usually Not Covered

Just as important as what’s included is what isn’t. Many homeowners are surprised by what falls outside the scope of coverage. Common exclusions include:

• Pre-existing conditions
• Improper installation or maintenance
• Cosmetic issues or upgrades
• Unknown code violations
• Items still under manufacturer warranty

Most home warranty plans also set coverage caps—once you hit the limit for a system or appliance, you’re responsible for the remaining balance.

How to Choose the Right Home Warranty

1. Assess Your Home’s Age and Condition

Older systems and appliances may benefit from coverage, while newer homes with brand-new equipment may not need as robust a plan.

2. Compare Providers and Coverage Options

Look for:

• Transparent pricing
• Clear coverage limits
• Reliable customer service
• Flexible plan options
• Local contractor networks

Reading customer reviews and checking BBB ratings can help you avoid companies with a reputation for claim denials or delays.

3. Understand the Service Fee Structure

Most home warranties charge a service call fee—usually $60 to $125—every time a technician visits your home. Lower monthly premiums sometimes come with higher service fees.

4. Decide What You Want Covered

Do you want a basic plan that handles essential appliances, or a comprehensive package that includes HVAC, plumbing, and electrical systems?

If you own a pool or specialty equipment, make sure add-ons are available.

5. Read the Fine Print

The contract outlines:

• Coverage caps
• Claim processes
• Service limitations
• Exclusions
• Required maintenance

Knowing these details ahead of time prevents frustration later.

Is a Home Warranty Worth It?

For many homeowners—especially first-time buyers—a home warranty provides financial predictability and peace of mind. If your home has older systems, expensive appliances, or you simply want protection from unexpected repair bills, a good home warranty can be a smart investment.

Compliments of Virtual Results