Everything you need to know about home warranties

You just bought a house, and in the negotiations your Realtor suggested you ask for a home warranty. Now you have one and have no idea what to do with it. What is a home warranty? What does it cover? How does a home warranty work? Is it worth the money? These questions flash through your head as you put the brochure and other paperwork away in a file cabinet. Will ever use the home warranty? Let’s hope not!

If you’re confused about home warranties, how to choose a home warranty, and the other questions above, read on. I cover all of these and more in this article. By the end, you should be able to make an informed decision about whether a home warranty is right for you.

What is a home warranty?

A home warranty is a combination of insurance and service agreement. Think of it like the warranty you might get with your car. It is not a homeowners insurance policy, and it is not short-term insurance if anything breaks in the home right after you buy it. Instead, it is a service agreement between the home warranty company and individual service providers which allows for the replacement of certain items within the home in case they break after buying the property.

The annual “premium” varies depending on the extent of the coverage you purchase. Very basic plans can start as little as $400 for the year and go up from there. Very comprehensive plans that include things like pool repairs can cost more than $1,000 a year. Usually, there’s also a service call. Some home warranties also cap the upper limit that they will cover for a repair.

Photo by Milly Eaton from Pexels

What does a home warranty cover?

Home warranties function like most other warranties so it allows you to get repairs and replacements as long as the warranty is in effect. How much it covers depends on the warranty you purchase. Usually, however, it will cover the major systems and appliances in your home. For example, the water heater breaks a couple of months after you purchase the home. A home warranty might cover that, if it’s included in your coverage.

There are also some repairs they don’t cover, unless specifically stated. Because the home warranty is designed for the major systems of your home, it generally doesn’t cover general repairs or maintenance. For example, it won’t pay for fixing the broken window if a baseball goes through it. Or annual preventive maintenance on your HVAC. These will still be out-of-pocket expenses.

How does a home warranty work?

You moved into your new home a few months back. You come home from a long day at work, and your newish refrigerator is not cold. After salvaging as much food as you can, you pull out the home warranty information and call them. The warranty company calls a service provider they are contracted with. The service provider comes to your home, diagnoses the problem, and fixes your refrigerator. If it’s not able to be fixed, you get a replacement fridge. You’re only out-of-pocket the cost of the service call, usually around $75.

Is a home warranty worth the money?

The beauty of the home warranty is not necessarily in the money it can save you, though that’s a plus, too. One of the big advantages is the instant connection to a local, trusted service provider and the coordination of the service. This is particularly useful if you’re new to town and don’t yet have connections with local repairmen. While you could definitely use a service like Angie’s List or Home Advisor, you’ll still be stuck with the cost of the repair.

It’s difficult to say whether a home warranty is worth the $400+ a year it will cost. Like any insurance, warranty, or service agreement, there will be years when you don’t use it at all. And there might be some years in which you use it a lot. This will be also depend on the coverage of your home warranty.

Which home warranty company is the best?

There are so many! I have personally worked with a few different companies. They all cover basically the same things for the same costs. It’s difficult to say how much they cost annually because cost is based on the size of the home, the location, and whether it’s a condo or single family home. All of these companies have online quote systems to make customizing your quote quick and easy.


Check out my home search site at www.realtorcrisintampa.com. On there you can search homes, save neighborhoods you’re interested in, save homes you love, see local recommendations and insights, see school info, calculate commute times and much more.

Interested in an easy-to-use, no-obligation mobile search app? Try my KW app. It’s free! And it works all over the US. Download it now!

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