What Buyers Need to Know About Home Warranties

When buying a home, you're most likely to focus on things like the listing price, location, and curb appeal. Because of this, it's common to overlook the cost of maintaining and repairing the home's essential systems and appliances after closing. That's where a home warranty can provide valuable peace of mind. Knowing what a home warranty is and what it covers can help you make an informed decision that you are still satisfied with years later.

What is a Home Warranty?

A home warranty is a service contract that helps cover the cost of repairing or replacing major home systems and appliances that break down due to everyday wear and tear. Unlike homeowners' insurance, which protects against unexpected disasters like fires, storms, or theft, a home warranty focuses specifically on mechanical breakdowns that occur during everyday use.

Home warranties are typically purchased for one year at a time and can be renewed annually. Sellers may offer a home warranty to incentivize buyers, or you can choose to purchase one yourself.

Major Systems Usually Covered

Your home warranty should protect your home's most essential systems. Although exact coverage will vary, most standard warranty plans include:

• Heating systems: Furnaces, heat pumps, and ductwork are often covered, helping protect buyers from costly repairs during colder months.
• Air conditioning systems: Cooling systems are commonly included, especially in warmer areas.
• Electrical systems: Circuit breakers, wiring, and electrical panels are usually part of basic coverage.
• Plumbing systems: This often includes pipes, water lines, and stoppages within the home's plumbing system.
• Water heaters: Repairs or replacements are frequently included in standard plans.

Having these core systems covered can help you avoid unexpected expenses that often arise shortly after moving in.

Appliances Often Included

Many home warranty plans also cover common household appliances, which can be expensive to repair or replace. Standard appliance coverage typically includes:

• Refrigerators
• Ovens, ranges, and cooktops
• Dishwashers
• Built-in microwaves
• Garbage disposals
• Washers and dryers

It's important to know that coverage generally applies when appliances stop working due to regular use rather than accidental damage or improper maintenance.

Optional and Add-on Coverage

Most warranty providers offer optional add-ons for items that may not be included in standard plans. Buyers may be able to purchase additional coverage for:

• Pools and spas
• Well pumps and septic systems
• Roof leak repairs
• Stand-alone freezers or second refrigerators
• Smart home components

These add-ons allow you to tailor their warranty to match the property's specific features.

What Is Not Typically Covered With a Home Warranty

While home warranties provide helpful protection, they do come with limitations. They generally do not cover structural issues in foundations, walls, or roofing beyond limited leak repairs. They also usually exclude problems caused by neglect, improper installation, or pre-existing conditions that were known before the warranty began.

Additionally, most plans require you to pay a service fee each time you request a repair, similar to a copay.

Consider a Home Warranty for Added Protection

For many home buyers — especially first-time homeowners — a home warranty offers financial predictability and reassurance. It can help reduce the stress of unexpected repairs while you adjust to homeownership.

While a home warranty doesn't replace a thorough home inspection or responsible home maintenance, it can serve as an extra layer of protection.

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