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What Should You Know Before You Purchase A Home Warranty Plan?

Purchasing a home warranty is one of the biggest investments a homeowner can do to protect their home appliances and systems. This is why it is very important for every homeowner to know everything about the home warranty before they make a bold move of purchasing it.

In this article, we are going to discuss some of the essential things that homeowners need to know about a home warranty before they can actually purchase it. Keep on reading to explore them.

What is a home warranty?

A home warranty is a service contract that covers the cost of home appliances and systems if they break down due to age or wear and tear. The homeowner will be paying annual or monthly premiums once he or she has entered into a contract. The homeowner won’t have to pay a huge sum of money repairing or replacing their home appliances and systems.

However, it is worth noting that a residential home warranty isn’t the same as homeowners insurance. That’s because a home warranty plan covers home systems and appliances, including HVAC, electrical, plumbing systems, dishwasher, refrigerator, oven, etc. Homeowners insurance, on the other hand, covers the structure of the home against theft, floods, fire, and other natural calamities.

How does a home warranty work?

If you are new to a home warranty, you may not understand well how it works. But this is how a home warranty works. If your appliance and system fail to work due to old age or wear and tear. You will call your home warranty company and notify them about the issue. Then you will have to file a claim. The company will send a technician or contractor who will come and assess your appliance or system. If the item is covered under your warranty contract, your claim will be approved, and the company will cover the cost of repairs or replacement if necessary.

The only thing you will be required to pay is a flat-rate service call fee, which ranges from $50-$100. This means that a home warranty can save you a lot of money on repairs. Research shows that homeowners can spend thousands of dollars annually on repairs and replacements. Home repairs on the other hand costs between $300-$600 annually, making it way lower compared to the amount of money homeowners can use on repairs.

Why should you get a home warranty?

If you are wondering whether or not you should purchase a home warranty plan, then you aren’t alone. In fact, many homeowners are very reluctant when it comes to purchasing a home warranty plan. This could be because most of them are still unaware of the benefits of having a home warranty plan.

As mentioned above, a home warranty can help homeowners save a substantial amount of money on repairs and replacements. It is no secret that repairs can consume a lot of money, especially repairs involving the HVAC, electrical, plumbing system. But the home warranty company will ensure that your item is repaired and that it goes back to working efficiently. And if it is damaged beyond repair, the company will replace it as long as the item is covered under your warranty contract.

A home warranty gives you peace of mind in case something goes wrong. Your system or home appliance can break at the wrong time. But knowing that somebody got your back in case of anything gives you the ultimate peace of mind. A home warranty plan also covers a wide range of appliances and systems in your home, depending on the plan you opt to buy. So, even if it is your oven, washer/dryer, dishwasher, or refrigerator, or systems such as electrical or plumbing that break down, the home warranty company will fix it.

Finally, a home warranty plan can help you avoid unnecessary debts on major repair expenses. Repairs on home systems such as HVAC, electrical, or plumbing can be quite expensive to repair. That’s because they can cost up to hundreds of dollars. If you don’t have an emergency fund, then the cost of repairing or replacing them can be quite overwhelming, hence requiring a payment plan. This can put you in consumer debt and drain you financially. But if you have a home warranty plan, you can avoid all these. That’s because the company will cover the cost of repairing your systems.

How much does a home warranty cost?

The cost of a warranty generally ranges from $300-$800, depending on the home warranty company and the items you want to be covered. That’s because if you want bigger items such as a refrigerator to be covered under the home warranty plan, you will have to pay additional money. In addition to that, there is a flat rate service call fee that you will be required to pay every time you contact the home warranty company to come and fix your system or appliance. It usually ranges from $50-$100.

What items are covered by a home warranty plan?

Here are some of the appliances that are generally covered by the home warranty plan:

  • Oven
  • Washer
  • Dryer
  • Garbage door opener
  • Refrigerator
  • Garbage disposal
  • Cooling system
  • Heating system
  • Plumbing system
  • Electrical system
  • Plumbing system

However, it is important to confirm what is actually covered under your home warranty contract before you finalize the contract. The last thing you want is for your claim to be denied on the basis that the item isn’t covered under your home warranty contract. So read the contract carefully and understand its content. If you have any queries, you can raise them to the company’s representatives.

Questions to ask yourself before you purchase a home warranty plan

Before you purchase a home warranty, you need to ask yourself these questions.

  1. Do I really need a home warranty?

Before you start looking for a home warranty company to purchase your policy, you need to determine if you really need a home warranty. You can do this by using a home maintenance calculator to check the estimated cost of maintaining your appliances and systems and then compare it with the cost of a home warranty plan for your home.

  1. How much am I willing to pay for the plan?

You also need to determine your budget and be able to know how much you can allocate for a home warranty. Your budget will determine the kind of plan you purchase, whether basic or comprehensive plan. As mentioned above, a home warranty costs between $300-$800. And apart from that, there will be additional expenses such as a service call fee, which you will pay every time a contractor comes to do the work.

  1. Am I sure which items are covered by the plan?

Yes, before you sign any contract you must know which of your items will be covered by the home warranty policy. Different home warranties offer varying levels o coverage. That’s why you need to ask the company to provide you with a list of the items that are covered under their coverage.

  1. Which policy should I purchase?

As mentioned above, there are two main types of coverage. That includes the basic plan and the comprehensive plan. The basic plan generally covers smaller items such as microwave, oven, washer, and dryer, while a comprehensive plan covers bigger items such as a refrigerator, septic tanks, HVAC systems, roofing, etc.  So, you need to determine which items you want to get covered to help you choose an ideal home warranty plan that suits your needs and budget.


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