What Does a Home Warranty Cover [Know What to Expect]

Settling into a new home can be tricky, especially when complicated terms like home warranty coverage and reimbursement rate are thrown your way!

Don’t worry, this article will answer all the questions which new homeowners might have, like “what does a home warranty cover?” We’ll also discuss exactly how a home warranty works, what it covers, and the common mistakes people make when choosing a plan for themselves.

What Is a Home Warranty?

A home warranty is a contract between the homeowners and a company, which covers the cost of household repairs that occur due to wear and tear. Just like any other form of warranty, the person has to pay a certain fee annually which covers the cost of the service fee that they would have to pay for any repairs. People usually enter into an annual service contract and renew their plans on a yearly basis.

The average cost of a home warranty ranges between $300 and $600 annually. The duration of home warranty coverage depends on the contract signed by the homeowners and the company. On average, people generally go for an 8-10 years cover plan. Moreover, a home warranty is transferable, which means that homeowners can transfer it to new owners if they ever sell their house.

How Does a Home Warranty Work?

Whenever equipment malfunctions, you contact your home warranty providers to file your claim. The home warranty providers then initiate the repairs process. They send their technician to assess the cause of damage and to determine if it is covered under the homeowners protection plan. The company views the reports. If the claim gets approved, they send a technician for repairs and replacements. Homeowners only pay a small fee or deductible to cover the cost of the repairs which usually ranges between $50 and $100.

What Does a Home Warranty Cover?

With so many companies and different home equipment, people often wonder “what do home warranties cover?”. The table below provides a list of all the common things covered in a home warranty plan:

What Doesn’t a Home Warranty Cover?

Home warranty insurance coverage covers most of the systems and appliances in a household. However, there are a few things that might not be covered:

• Swimming pools: Swimming pools are generally not covered in warranty plans. People can opt for their coverage as an add-on.

• Pre-installed equipment: Warranty companies do not cover pre-installed equipment which already has some structural issues. They check for any pre-existing conditions before including it in the warranty plan.

• Components of home systems and appliances: Many warranty companies do not cover specific parts or components of the equipment. This can include vents, filters for air conditioning, faucets, etc.
• Misuse of an appliance or system: If the appliance has been misused or not maintained properly, the warranty company can deny its repairs.

Key Takeaways

• A home warranty plan is a contract between homeowners and a company that covers the cost of household repairs.

• Many people do not know how home warranties work and often confuse them with home insurance.

• The process involves contacting the company. If the claim gets approved, the warranty company pays for the repairs.

• A few things which may not be covered include pools, spas, pre-installed equipment, etc. They can be added as extras in the policy.

Common Home Warranty Mistakes

There are a few mistakes that people tend to make while choosing a home warranty plan. These mistakes are especially done by new homeowners who may not know what a home warranty is.

The first mistake is not researching the companies thoroughly. Simply purchasing the first home warranty you come across is a bad idea. You have to compare the companies, their prices, all the systems and appliances they cover, and their annual coverage limits.

Another common mistake is skipping home inspection. It is important to hire a professional house inspector who can check basic things like the electrical system, water system, and other equipment. This inspection will allow homeowners to decide upon the right warranty plan as per their needs.

Last but not least, it’s important to read the warranty contract thoroughly. It sounds obvious but many people fail to understand the complicated terms and conditions contained in it. If you find it difficult, hire a professional who can explain everything in detail. It will only cost a few bucks but can save thousands in the future!

Conclusion

A home warranty plan is necessary to cover the cost of the household repairs, especially for people who buy old homes. While many people wonder “what is a home warranty plan?”, simple research can do wonders and can help save a lot of money in the long run.

A warranty plan covers all the basic equipment like an oven, air conditioning, and heater. If required, it can also include add-ons, e.g. swimming pools. We advise you to choose the best warranty plan according to your needs and avoid the common mistakes people make when purchasing one.