When it comes to protecting your investment in your home, understanding what is included in home warranty coverage can save you thousands of dollars in unexpected repair and replacement costs. Unlike homeowners insurance, which covers damage from sudden events like fires or storms, a home warranty specifically addresses the inevitable wear and tear that affects your home’s systems and appliances over time.
A home warranty is a service contract designed to cover the repair or replacement of major home systems and appliances that break down due to normal wear and tear. Think of it as a safety net for the working components of your home that you rely on daily.
Unlike a manufacturer’s warranty that covers a single item for a specific defect, a home warranty provides broader protection across multiple systems and appliances from different manufacturers – all under one contract. This consolidated coverage can be especially valuable for older homes where appliances and systems are reaching the end of their expected lifespans.
Home Systems Typically Covered by a Standard Warranty
Most home warranty companies offer tiered plans, with basic coverage for either systems, appliances, or a combination of both. Here’s what you can typically expect to be covered under the systems portion of a home warranty:
1. HVAC Systems
The heating, ventilation, and air conditioning system is one of the most valuable components covered by home warranties, primarily because repairs and replacements can be extremely costly.
Standard coverage typically includes:
- Central air conditioning units
- Heating systems (furnaces, heat pumps)
- Ductwork
- Electric baseboards
- Thermostats
- Standard components and parts essential for operation
HVAC coverage is especially valuable considering that a new system can cost $5,000-$10,000 to replace. Some premium plans may even cover annual HVAC service visits, which help maintain system efficiency and extend its lifespan.
2. Electrical Systems
Your home’s electrical system is another critical component that home warranties typically cover. Coverage usually includes:
- Interior electrical wiring
- Main electrical panel and breaker box
- Switches and outlets
- Ceiling fans
- Built-in exhaust fans
- Doorbells
When electrical components fail, they can create not just inconvenience but safety hazards. Having warranty coverage ensures that qualified professionals address these issues promptly.
3. Plumbing Systems
Plumbing issues can quickly escalate from minor annoyances to major disasters. Standard plumbing coverage typically includes:
- Interior water lines
- Drain lines
- Pipe leaks and breaks
- Toilet mechanisms and tanks
- Built-in bathtub whirlpool motors
- Pressure regulators
- Sump pumps
- Stoppages that can be cleared with standard equipment
Many plans also cover plumbing fixtures, though cosmetic issues are generally excluded.
4. Water Heaters
Whether traditional tank-style or tankless, water heaters are almost always covered under system plans. Coverage typically includes:
- Heating elements
- Thermostats
- Gas valves
- Tank leaks
- Circulating pumps and motors
- Pressure relief valves
Given that water heaters have a typical lifespan of 8-12 years and replacement costs range from $800-$1,500 for standard units (and more for tankless models), this coverage can be quite valuable.
Major Appliances Typically Covered
Home warranty companies also offer coverage for major home appliances. Here’s what’s commonly included:
1. Kitchen Appliances
The kitchen is home to some of your most frequently used and costly appliances:
- Refrigerator: Main refrigerator/freezer unit, though ice makers and water dispensers may be excluded or require additional coverage
- Oven, Range, Stove, Cooktop: Electric and gas units, including standard components like heating elements, burners, and thermostats
- Built-in Microwave: Typically covered if permanently installed (countertop models are excluded)
- Dishwasher: Including motors, pumps, baskets, and control mechanisms
- Garbage Disposal: A common failure point in kitchens
- Trash Compactor: Usually included in comprehensive plans
2. Laundry Appliances
Laundry appliances represent a significant investment and are covered by most comprehensive home warranty plans:
- Clothes Washer: Including motors, pumps, transmission, and control boards
- Clothes Dryer: Including heating elements, motors, and electronic controls
3. Other Common Appliances
Additional appliances often covered include:
- Garage Door Opener: The motorized unit, though typically not the door itself or remote controls
- Free-standing Freezer: Sometimes included or available as an add-on
- Built-in Food Centers: In some premium plans
Optional Coverage Add-Ons
Most home warranty companies offer additional coverage options for items beyond the standard inclusions. Common add-ons include:
- Swimming Pool and Spa Equipment: Motors, pumps, heaters, and filtration systems
- Well Pump Systems: For homes with private water supplies
- Septic System and Pumping: Tank and line components
- Limited Roof Leak Repair: For specific types of roofing materials
- Central Vacuum Systems: Motors and electrical components
- Additional Refrigerators or Freezers: For secondary units
- Water Softener Systems: Components and mechanisms
- Sprinkler Systems: In some plans
- Guest Units or Casitas: For separate living spaces on the property
- Electronic Protection: For home entertainment and computer systems
These additional coverages typically increase your monthly or annual premium but can provide significant value for specialized systems that are expensive to repair or replace.
What’s Not Covered: Common Exclusions
Understanding what home warranties don’t cover is just as important as knowing what they do cover. Here are the standard exclusions found in most home warranty contracts:
1. Pre-existing Conditions
Problems that existed before your warranty began are typically excluded. This is why some companies require a home inspection before coverage starts, particularly for real estate transactions.
2. Improper Installation or Maintenance
Damage resulting from improper installation, inadequate maintenance, or misuse is generally not covered. For example, an HVAC system that fails because of dirty filters or lack of regular service may not qualify for coverage.
3. Cosmetic Issues
Scratches, dents, or color mismatches that don’t affect the functioning of an appliance or system are almost always excluded.
4. Structural Elements
Home warranties typically don’t cover:
- Foundation
- Walls
- Roofing (except limited leak repair as an add-on)
- Windows and doors
- Flooring
These structural elements are generally covered by homeowners insurance or builder’s warranties for new construction.
5. Secondary or Consequential Damage
If a covered water heater leaks and damages your flooring, the warranty will likely cover the water heater repair but not the floor damage. This would fall under your homeowners insurance.
6. Commercial-Grade Equipment
High-end, commercial-grade appliances (like wine refrigerators or restaurant-quality ranges) may be excluded or require specialized coverage with higher limits.
7. Items Under Manufacturer’s Warranty
If an item is still covered by the original manufacturer’s warranty, the home warranty company will typically require you to pursue that coverage first.
8. Code Violations and Upgrades
If repairing an item requires bringing it up to current building codes, the additional cost is often excluded.
How Home Warranty Claims Work
The claims process is fairly standardized across the industry:
- Repair the item
- Replace the item if repair isn’t feasible (up to contract limits)
- Provide a cash settlement in some cases
Most home warranty companies try to have a technician contact you within 24-48 hours of filing a claim, though actual service times vary based on technician availability and the urgency of the issue.
Coverage Limits and Replacement Policies
Home warranties come with financial limitations that are important to understand:
- Per-Item Caps: Most plans set maximum payout amounts for specific items. For example, a contract might limit HVAC coverage to $2,500 per system per contract term.
- Aggregate Caps: Some policies also have an overall maximum payout limit for the entire contract period.
- Replacement Approach: When an item can’t be repaired, the warranty company will typically provide a replacement with similar features and efficiency—not necessarily the exact same brand or model.
- Cash-Out Options: Some companies offer cash settlements instead of coordinating replacements, which may be less than the retail cost of a new unit.
Understanding these limits helps set realistic expectations about what your warranty will provide.
Home Warranty vs. Homeowners Insurance
A common point of confusion is the difference between home warranties and homeowners insurance:
| Home Warranty | Homeowners Insurance |
|---|---|
| Service contract for systems and appliances | Insurance policy for your home’s structure and contents |
| Covers normal wear and tear | Covers sudden, accidental damage from perils like fire, theft, and storms |
| Optional; not required by mortgage lenders | Required by mortgage lenders |
| Costs $300-$700+ annually plus service fees | Costs $500-$1,500+ annually plus deductibles |
| Covers expected failures over time | Covers unexpected events |
The two can work together—for instance, if a covered water heater fails (warranty) and causes water damage (insurance).
Tips for Choosing the Right Home Warranty
If you decide a home warranty is right for you, follow these steps to choose the best coverage:
- Read Sample Contracts: Compare the fine print of several providers before committing.
- Check Coverage Limits: Verify the maximum payouts for high-value items like HVAC systems.
- Research Provider Reputation: Check customer reviews, Better Business Bureau ratings, and complaint history.
- Understand the Claims Process: Know how to file a claim and the expected timeframe for service.
- Consider Service Fees: A plan with a higher annual cost but lower service fee might be more economical if you anticipate multiple claims.
- Verify Network Quality: Ask about the screening process for service technicians and whether you can request specific providers.
Homeowner.org Can Help You!
The best approach is to thoroughly read contracts, understand limitations, and maintain your home systems and appliances according to manufacturer recommendations. A home warranty can be a valuable tool in your overall home management strategy, providing both financial protection and peace of mind.
Whether you’re a first-time homebuyer, a long-time homeowner with aging systems, or someone purchasing a previously owned home, knowing what’s covered—and what’s not—will help you maximize the benefits of your home warranty investment.
At Homeowner.org, we’re here to guide you along the way in your journey regarding all things related to buying, owning, and loving your home. Check out our site for more today.
