Home Warranty Coverage: What is Covered and Not Covered?
A home warranty serves as monetary security against unexpected breakdowns of home systems and appliances requiring expensive repairs or replacements. While getting home warranty coverage, the most crucial thing is to check what is covered in a standard service contract. Most people assume that a home warranty plan covers all sorts of repairs, but you should know that some items are NOT covered in your home appliance insurance.
What to Expect in a New Home Warranty?
Home warranties may be procured when purchasing a new or pre-owned home by a landowner, seller, or investor. The terms of its contract decide each company’s coverage. Basic home warranties usually cover the parts and labor on repair or replacement of chief home systems and equipment and some code upgrades.
Most home warranty firms provide a variety of plans. These offer different coverage levels, so be sure to study any warranty contract details before purchasing. Even if you decide to renew the warranty contract from year-to-year, double-check your plan’s details as there is a possibility of the coverage changing every year.
Types of Home Warranty Coverage
- As home warranty plans differ, you have to check what is covered under your plan. Inquire with your real estate agent to find out if upgrades are available.
- Home warranty companies have three types of coverage – basic coverage, enhanced coverage, and optional coverage. Some companies may not have basic coverage but a standard policy instead.
- Not all companies include the same items in their standard policy. Once you know what the covered items under a particular category are, the next step is to opt for a plan that suits your home. Home warranty plans can be classified based on the number of items that are protected.
Basic plans cover just a limited number of devices and are ideal for homeowners who want limited coverage. A basic home warranty coverage includes major systems and everyday use appliances.
The items covered in a home warranty plan can also differ from state to state. The everyday use of appliances varies depending on climate conditions and other factors—for example, the plumbing system, electrical system, ceiling fans, refrigerator, etc.
The enhanced coverage includes specific systems and appliances commonly used along with the devices from the basic plan. An enhanced coverage costs slightly more than basic coverage. Your HVAC, microwave, washer/dryer, etc., and other major appliances are not included in the basic coverage in certain home warranty policies.
This plan is perfect if you want coverage for devices of your choice. It allows you to customize coverage for appliances or systems that you deem necessary. It is ideal for homeowners looking out for a tailor-made plan or combo plan.
Optional coverage includes those items that are not covered under the basic or enhanced plans. These are not the common appliances that most households have. This coverage gives you the option of adding your pool, spa, wine cooler, well pump, etc., to your home warranty policy. You need to pay a fixed extra premium to put optional add-ons in your home warranty policy.
Most home warranty company websites have a sample policy. It states what items are included in basic, enhanced, and optional coverage plans. Make sure to read through the document to understand the items included under each system and appliance plan. Pay close attention and read cautiously to know the coverage, limitations, and exclusions.
WHAT DOES A HOME WARRANTY COVER?
Some companies structure their home warranty plans into systems-only, appliances-only, and combination plans, while others follow the basic, enhanced, and tailored model that we just outlined.
Basic Coverage plans usually include HVAC, electrical, and plumbing systems in integrated plans. Enhanced coverage plans often include all the household systems and most of the appliances above. Some companies offer multiple enhanced coverage plans with an increasing number of items for higher-priced plans.
Optional coverage items typically include:
- Swimming Pool- pump and others
- Roof Leak
- Septic system
- Stand Alone Freezer
- Second air conditioner
- Second fridge/freezer
- Wine cooler
- Additional spa
- Wet bar fridge
- Code Upgrades
- Water Filtration System
- Booster Pump
- External Plumbing
- Ornamental Fountain Motor
- Solar Hot Water System/Equipment
- HVAC Tune-up
Coverage differs from one policy to another.This difference is based on the state, and it’s why you should read through the policy before you commit. Another point to note is that the coverage also varies for each company. The sample brochure from the company would state the items that are covered under the home warranty.
What Items Are Not Covered In Basic And Enhanced Home Warranty Plans?
Contracts only cover specific parts, appliances, and systems, while all the rest is excluded. You may opt to pay an extra premium to cover items that are not already in a standard plan before signing the contract.
- Faucet repairs (unless otherwise stated in the policy)
- Hot tubs (you can request/add this coverage in some cases)
- Outdoor items such as sprinklers
- Whirlpool bathtub (you can request/add this coverage in some cases)
- Hauling away debris
- Hauling away old appliances
- Outdoor water systems
- Combo ceiling fans
- Food spoilage
- Booster pump
- Home entertainment
- Office package
- Extended pipe leak coverage
- Accessories for appliances- shelves, racks, doors, etc.
- Light Fixtures
- Remote Controls
- Gas A/C, Window Units
Make sure to accurately ascertain what is covered and not covered in your plan before signing any contract. While a home warranty is an added layer of protection, it doesn’t replace every malfunctioning device.
Home Warranty Coverage Limits
An important limitation of a home warranty plan is that it doesn’t cover every part and component of a covered device. Customers are often surprised to find that accessories and outer sheets of appliances are not covered. A careful reading of the service contract can prevent many misunderstandings and frustrations.
When it comes to appliances, the following components are usually excluded:
- Detachable Components
- Door Glass
- Outside or underground piping
- Halogen Unit
- Interior Lining
- Light Sockets
- Light Switches
- Lock And Key Assemblies
- Magnetic Induction Cooktop
- Portable Or Freestanding Microwave
- Refrigerator/Oven Combination Unit
- Runner Guards
- Sensi-heat Burners
- Timers And Clocks that do not affect the functioning of the appliance
- Trash Compactor Buckets
- Trim Kits
Another important detail about a home warranty plan that many fail to realize is that the coverage amount is limited. Though one can have unlimited service visits and diagnoses, the home warranty company pays for repairs only up to a ceiling value. For instance, American Home Shield pays only up to $1500 per contract term for servicing geothermal or water source heat pumps, glycol, hot water, or steam circulating systems as part of the heating system coverage.
Most systems are covered by home warranty companies up to $1500 on average, while appliance coverage may be available up to $2000-5000. Some companies offer different payment rates for coverage options, such as $1,000 for a built-in microwave or $500 for a garage door opener.
For malfunctions exceeding this limit, the customer has to pay out-of-pocket. The older your devices are, the better it is to choose a company offering a high regular reimbursement cap.
How Much Does A Home Warranty Cost?
Annual premiums of home warranties range from $300-$600. If your annual systems and appliances maintenance costs exceed this amount, a home warranty plan will be a prudent investment for saving your budget. Check out our home maintenance calculator to analyze whether you should invest in a home warranty plan.
The service call fee or a deductible of a home warranty ranges from $50-$125. Each time you file a claim, you must pay a deductible. Customers should also note that the service call fee varies from company to company.
When Does Home Warranty Coverage Begin?
When you buy a home warranty policy, the coverage does not start right away. There is a short waiting period to ensure that the systems and home appliances are not malfunctioning even due to pre-existing conditions.
Most warranty providers have a 30 day waiting period, while a few have a 10-day waiting period. Some companies provide the option to shorten the waiting period if a home inspection report can be provided. If you’re renewing your home warranty policy, then a waiting period may not apply to you.
How Long Does Home Warranty Coverage Last?
Home warranty policies typically last for 12-13 months and can be renewed at the end of the term. Home warranty companies renew the contracts automatically as the year or contract period ends.
Make a note of the expiration date of your contract as some companies do not offer automatic renewal, and you’d have to renew your contract to continue using their services manually. If you want to cancel automatic renewal, remember to end it within the specified period mentioned in the contract. Some companies offer a chance to cancel within the first 30 days of the contract period, while some extend the period to 60 days.
The Bottom Line
A home warranty provides a cushion for unknown issues that homeowners might face throughout the year. Before you buy, you should ensure that you read the home warranty contract.
Ensure that most of the appliances and systems that are actively used are covered. Home sellers that would like to provide a home warranty to buyers and homeowners. This will make them feel reassured that any repairs or replacement would be covered with a home warranty.
You should do extensive research to get a reputable home warranty company. This will pay for genuine repairs when they are required.
Watch this video on more home warranty tips:
Frequently Asked Questions
What is Covered in a Home Buyer Warranty?
A home warranty will cover repairs and replacements on appliances and systems due to normal wear and tear. A home warranty covers items like electrical systems, plumbing, and kitchen appliances such as oven, range, and garbage disposal.
What’s the difference between warranty coverage and homeowners insurance?
Home insurance covers damages to the home and some systems and appliances from natural calamities and loss of belongings due to theft or crime. Home warranty coverage is for mechanical breakdown of systems and appliances due to age and normal wear and tear.
Will a home warranty cover any malfunction?
A home warranty plan covers the breakdown of systems and appliances due to normal wear and tear. It does not cover malfunctions arising from:
a) missing components
b) lack of capacity/load-bearing
c) mismatched components in terms of efficiency/capacity
d) changes in zoning code, building codes, etc.
e) rust, corrosion, and pre-existing defects
f) Improper installation/repair/modification
What does a $500 home warranty cover?
The coverage afforded by a $500 home warranty depends on the company offering the plan. Generally, plans that cost $500 or more are a variant of enhanced coverage and will include core systems like HVAC, electrical, plumbing, and core appliances like refrigerator, dishwasher, clothes washer and dryer, etc.
What is the best home warranty coverage?
The best home warranty coverage that we recommend, based on our extensive experience, is an enhanced coverage plan that provides comprehensive coverage over major systems and appliances. We recommend that you take into consideration the age of your home, its systems, and appliances when looking at enhanced coverage plans. You should not miss getting your HVAC, electrical system, and refrigerator covered.
How much do service fees cost?
Home warranty service fees are also referred to as a deductible. When you make service requests, you have to pay a service call fee for each one. It can range between $60-$125 depending on the home warranty companies plans and premium pricing.
How do I make a home warranty claim?
Making a home warranty claim is really simple now since companies register them over the phone or online. All you have to do is log in to your account or call their claims department’s phone. Provide the details they ask for and schedule an appointment with the service technician.
Does a home warranty cover water damage?
A home warranty does not cover water damage, but it can cover the causes of water damage. Home warranty plans cover plumbing systems, including stoppages and water heaters. Therefore, calling your service provider when you need a fix can save you from issues of water damage like mold.
Do home warranties cover roofs?
Some home warranty companies offer limited roof leaks coverage. They don’t offer other types of roof problem coverage, nor do they provide roof replacement. They may also not cover patios, metal roofs, shingles, and structural leaks, as well as leaks that will call for roof replacement.