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What is Home Warranty Insurance and What Does it Cover?

August 15, 2020

Post by: Nancy Braun, Showcase Realty



When you buy a home in Charlotte or anywhere else in the U.S.,  one of the offers you’ll receive is a home warranty. Like buying a new appliance, there is also a warranty that comes in home buying.

A home warranty is a product meant to protect the significant components of your home and cover your finances in case you need repairs. It covers the repair or replacement of critical items like the furnace, air conditioning, refrigerators, washers and dryers, and other mechanical components.

As a new homeowner, you’re focused on paying the monthly mortgage. But what happens when the AC breaks down in the middle of summer? Or when the heater fails in the middle of winter?

When an electric appliance breaks down, it means spending more money. A home warranty covers the cost of repair, but it means paying several hundreds a year. Is it worth the price? Let’s find out more below.

Do You Need a Home Warranty?


A home warranty is an insurance, a service contract designed to cover specific appliances under specific conditions. The contract pays for repairs or replacement of particular parts like the furnace, plumbing, or HVAC.

A policy lasts for one year from the agreed date. This annual renewal system means essential areas of your home are covered from a mechanical breakdown for a year.

If you enjoy the convenience of having a professional take care of your appliances and the peace of mind knowing that you and your appliances are secure, you need a home warranty.

Who Should Buy a Home Warranty?

If you’re not buying new construction, you may want to consider getting a home warranty, especially if the home inspection shows that some home appliances are close to the end of their life span. Do this to ensure that when the machines have reached their breaking point, you’ll be covered and won’t have to spend hundreds of dollars for the repair or replacement.

What is the Difference Between Home Warranty and Home Insurance?


Both insurances cover unexpected circumstances.

The difference is in the exclusions. The homeowners’ policy does not include reimbursement for regular wear and tear. The home warranty, on the other hand, does not cover accidents like fire and theft.

If your washing machine breaks down, the water damage is covered by homeowners’ insurance. The actual dishwasher will be covered by the home warranty if it is a part of your policy.


How Much Does a Home Warranty Cost?

It depends on your provider and location.

The cost is determined by the:

  • extent of coverage
  • type of plan
  • additional services
  • size of the home

You have the option to customize the coverage of your home warranty. Just remember, the less money you spend, the less coverage you have.

You can pay for the home warranty either monthly or annually. Annual payment can be daunting because it’s a large sum, so many warranty providers offer monthly payments.


Questions to Ask Yourself Before Buying a Home Warranty

Are you getting ready to buy a home warranty insurance?  Here are six questions you need to ask before you sign the dotted line.


1. What other costs are there other than the initial home warranty premium?

Home warranty service averages $75 per home visit. This fee is paid at the time the licensed technician visits your home. The fee is also determined based on the type of call, what needs to be repaired during the call, and what your plan allows. Each home warranty company has different rules about a service call, so you need to ask about the selection process.


2. Is the manufacturer’s warranty sufficient?

When you buy a previously owned home, ask the home seller if he still has a copy of the warranty coverages of the different systems and appliances. Try to get the warranty of all the appliances that come with the house.

If the warranty coverage still apply, you may not need to include those appliances in a home warranty, or even get a home warranty at all.

However, if you can’t get the manufacturer’s insurance, get a home warranty.


3. Should I buy the home warranty as soon as I close on my home?

The home warranty can be purchased at any time, so the answer is up to you. Some companies request for a waiting period to check that they are not paying for a problem that’s already there.


4. Can I afford the cost of repair or replacement if I don’t have a home warranty?


This is an excellent question to ask yourself.

Do you still have money in your savings account? Do you still have enough to cover for replacement or buy a new appliance? If you do, you don’t have to get a home warranty.

If you plan to replace old appliances with new ones, a warranty is also not in your best interest.

However, you have to consider how much you’ll be spending on new appliances or repairs. Perhaps that money could be best used as a savings.


5. What are the inclusions and exclusions of a home warranty?

A home warranty covers the repair or replacement of many major home system components and appliances. Breakdown due to wear and tear, failure, standard usage, and other problems that also happen with age are covered.

Excluded from home warranties are improper installation or maintenance, code violations, pre-existing conditions, and items still under the manufacturer’s warranty.


Benefits of Getting a Home Warranty

There are many things to love about a home warranty policy.

Just imagine how much you’ll save knowing when your AC breaks down. You would only have to pay for the call to the service center. The rest of the repair or replacement will be taken care of by the policy.

It’s no wonder many homeowners love them and often renew home warranty services.

Here are the benefits of buying a home warranty policy:

  • Peace of mind

The best benefit a home warranty offers is the peace of mind homeowners enjoy. You can relax and worry less about the repairs.

Leaky toilets or a broken air conditioner are no big deals with a home warranty. The solution is just a call away.

Expensive repairs that may have brought financial challenges are not an issue because they’re likely covered by the policy.

  • Easy fix

With a home warranty, you only need to remember one number, or even simply send an email for repair.

You don’t have to spend time searching for and researching reputable repair companies, because your home warranty has already chosen the best companies to take care of the job. You also don’t have to wait until business hours to start your repair.

  • Big savings

Having a home warranty means seeing big savings on the most common repairs. Home warranties cover several appliances for about $300-500.

The average cost of a washing machine repair is $150. Air conditioning repairs cost an average of $300. Furnace repairs cost about $250.

You’ll save more than you spend when you have a home warranty.

  • Avoid debt

Serious issues like plumbing systems breakdown or broken air conditioners can add up and cost thousands of dollars to repair or replace. If you don’t have an emergency savings account, the cost can be a serious problem.

You may even get consumer loans just to pay off the repair or replacement cost. Any additional loans will strain your budget and del your credit rating. With a home warranty, you don’t have to worry about getting into debt.

  • Customized protection

Different warranty providers offer different protection. The basic plan covers major appliances, including heating, electrical, and plumbing systems. Appliances included are dishwasher, ovens, and fan.

You can also get protection for your refrigerator, washer, dryer, and more. You can also get additional coverage for your pool.

You can choose to save on items, or increase coverage so that your home appliances and systems are well protected.

Getting a home warranty increases the protection you deserve.

Do you have any real estate question? 

Call me, Nancy Braun, at (704) 997-3794 today.


Get a FREE copy of of my book, The ULTIMATE No Holds Barred Guide To Buying and Selling A Home In The Carolinas, visit: http://www.experthomehelp.com/


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