A home warranty plan is an insurance product – in the form of a service contract – that is intended to provide coverage for various key elements of your home, and to help defray costs when repairs to your home appliances and systems are needed.
These services are provided in exchange for an annual premium and service fees whenever a repair or replacement is required.
What appliances need coverage?
A home warranty plan is designed to cover items that are not typically covered by most home insurance companies, which is what makes the product so attractive to many homebuyers.
When you purchase a home warranty plan, it will cover certain appliances in your home which should be clearly specified in the contract. If any covered appliance is in need of repair, you can simply contact your warranty provider who will arrange for a service technician to visit your home to fix the damaged appliance. You will not have to pay for the actual repair – only for the service.
This kind of protection can result in considerable savings because you don’t have to pay for the actual repair, which could run into hundreds – or even thousands – of dollars, especially if replacement parts are involved. Under the best of circumstances, a home warranty plan will not only save you money but also save you precious time.
Do I need a home warranty plan?
Home warranty coverage varies from the very basic to the extremely extensive, depending on your needs, budget, and how much risk you believe you have in your home.
Homeowners & contractors both agree that owners of older homes are the ones most in need of some form of home warranty protection. As a general rule, if your home is more than four years, then your risk is greatest - which means you are likely to benefit the most from a home warranty plan.
Here are a few other homeowner considerations:
- Homeowners with older homes (4+ years)
- Homeowners with no other warranty/ insurance for their appliances
- People with no time/skill for DIY household repairs
- People who cannot afford repairs and replacements frequently
9 appliances Your Home Warranty Plan SHOULD Cover
The number of items covered in a home warranty plan usually determines the amount of the premium to be paid.
Some homeowners make the mistake of opting for a plan simply based on the fact that it has a cheaper premium. Unfortunately, this often leaves them with inadequate coverage when common home appliances break down or require replacement.
The more advisable solution is to determine which specific appliances or systems in your home are most expensive to repair, and then compare premiums accordingly. And though every homeowner will have different needs, almost all homes contain basic appliances that are part of daily modern life and they should be covered in a standard home warranty plan.
Generally, major appliances are the most expensive to repair - so naturally, they are prime options when it comes to considering which appliances should be included in your home warranty plan.
Here’s a list of appliances that you might consider as part of your home warranty plan:
Refrigerators
Coverage includes repairs or replacement of vital parts needed for the normal operation of your refrigerator. Causes should be attributed to normal wear and tear. Non-essential parts such as shelves, ice makes, ice crushers, water dispensers, and removable accessories are not covered.
There is also a limit to the number of refrigerators are covered. Usually, kitchen refrigerators are referred to in-home warranty plans. If your home contains more than one refrigerator, additional coverage is available. However, this is an additional feature and a corresponding premium is required.
Clothes Washers & Dryers
Home warranty plans that cover clothes washers and dryers only include repair or replacement of major parts and components that break down due to normal wear and tear. This does not cover other parts and accessories such as knobs and dials, soap dispensers, hooks, shelves and touch pads.
Ranges/ Ovens/ Cooktops
Coverage is for repair and replacement of parts and components essential in normal functioning. But this should be due to normal wear and tear. Coverage does not extend towards accessories such as racks, knobs, dials and light sockets. Clocks can also be included if it could be proven that it is important and that it can affect the oven’s functioning.
Dishwashers
Home warranty plans for dishwashers include repair and replacement of parts and components breaking down due to normal wear and tear. It does not cover removable accessories, racks, rollers and baskets.
Built-in Microwave Ovens
Coverage does not include shelves, door glass, countertop units, assemblies and other accessories. This only covers parts and components damaged due to normal wear and tear.
Trash Compactors
Removable buckets and other accessories are not covered. Only parts and components required for normal operation are covered under home warranty plans.
Hot Water Heaters
Essential for a normal-functioning household, hot water heaters are also eligible for coverage under a home warranty plan. Coverage is for repair and replacement of parts and components necessary to maintain normal functioning, but this should be due to standard wear and tear.
Coverage is extended to tankless water heaters and circulating pumps. Like any warranty, your water heater coverage excludes some parts and malfunctions. The following are not included:
- Auxiliary holding or storage tanks
- Fuel storage tanks
- Energy conservation unit
Garbage Disposal
In some household kitchens, a garbage disposal is an indispensable system to clean up unwanted food efficiently and effectively. Though these systems are estimated to last for around 10 years, it’s possible there could be problems with it during its use. As with all appliances covered by a home warranty, coverage includes normal wear and tear malfunctions.
There is also a limit on how much your plan could cover in a year so be sure to keep your appliances in optimum condition. Having appliance coverage has its limits so be sure to check your policy for terms and conditions.
Ceiling Fans
Ceiling fans are a practical addition to your home, adding circulating air to any space. They're also a smart choice, as they may help to cut down on your home energy costs.
However, like all electrical and mechanical appliances, a variety of malfunctions can occur with ceiling fans. Perhaps sudden airflow issues arise, or it starts to wobble, or perhaps it is unusually noisy. As with most home warranty plans, all components and parts are covered, due to normal wear and tear.
Home Systems Coverage
In addition to covering home appliances in a home warranty plan, many home systems are also covered as part of a standard contract.
It is important to carefully review what is in your contract to make sure that you are not paying for coverage that you do not need or want.
In addition to the appliances listed above, basic coverage typically includes the following:
- Plumbing stoppages
- Plumbing System
- Sump pump (permanently installed)
- Toilets
- Hot water pump
- Bathroom whirlpool motor pump
- Smoke detectors
- Attic and exhaust fans
- Heating and duct-work
- Telephone system
- Electrical system (interior)
- Doorbells
- Air conditioning
- Telephone wiring
- Central heating system
- Range Hood
- Humidifier
- Duct work
- AC refrigerants and coils
- Plumbing faucets and fixtures
- Freestanding ice makers
- Improper appliance installation
- Mismatched systems
What Do Home Warranties Not Cover?
If a specific item is not included in the basic warranty plan, and it needs to be, then a customized warranty might be a sensible investment. The cost of an enhanced plan, with its broader range of coverage options, can cost an additional $100 - $600, on top of the standard plan.
Some of the systems and appliances that are not typically covered as part of a standard or common plan are:
- Pools/Hot tubs
- Sprinkler systems
- Outdoor water systems
- Well Pumps
- Central Vacuums
- Septic systems
- Stand Alone Freezers
- Home entertainment system
- Wine cooler
Also, it’s important to know that most home warranty companies will not cover any pre-existing defects or damages, meaning that if your item was broken or not working before you purchased the warranty, the company will not pay to have it fixed.
In addition, there are a number of other potential loopholes you should be aware of. For example, some companies will not cover damages made by animals, or problems stemming from improper system installation, or any malfunction they conclude was caused by poor maintenance.
Before you get a home warranty plan Quote
The home warranty business is notoriously dodgy – there are some very reputable and honorable companies in this field and some that are not. So it is incumbent upon you – the consumer – to do your homework before signing a contract.
Check with the Better Business Bureau (BBB). Contact professionals in the home repair and construction fields to get as sense of a company’s reputation on the street. Carefully review all contracts and avoid the ones that are needlessly complicated.
Because coverage differs from policy to policy and from state to state, request to see a sample copy of a policy before you commit. The sample copy clearly states what items would be covered under your home warranty policy and also the extent to which the items are covered.
Home warranties offer valuable home protection and potentially save a homeowner lots of money, but only if the company actually delivers on the services they have promised to provide.
So make sure to read the fine print and know exactly what the warranty will cover – and for how much – before signing any contract.