What is a Home Warranty?

A home warranty is essentially a written agreement that states a company will repair or replace a defective product or component of a home at no additional cost. The warranty states that it is an obligation of the company to replace or repair the item for a specific period of time. But the words “written warranty” aren’t always used specifically to mean that a warranty has been issued. Instead, the terms are used in a generic way to describe any arrangement that puts both parties on the same page. So what is a home warranty?

A standard home warranty covers all items listed in the coverage and is purchased by the original purchaser of the property. Some warranties also cover a portion of the property (such as roofing) and/or other things covered under the original agreement. It is important to note that many warranties don’t cover all of a property’s contents, like furniture, appliances, personal property, etc., which are covered under separate annual service contracts.

A comprehensive warranty covers virtually every item in the property, excluding certain excluded items such as built-in machinery. Many home warranties specify the covered items and their estimated lifetime. It is wise to inquire about the exclusions and limits before purchasing the policy. Some warranties also cover only selected items, rather than the entire home. In these cases, it is good to read over the fine print and ask the representative for clarification.

Although what is a home warranty? is an easily answered question, determining what insurance coverage is included and how much it will cost is not. Most warranties companies require homeowner’s insurance to be purchased separately from the warranty. Therefore, it is imperative to inquire about which types of coverage are covered and to inquire about premium payments, if any, in advance of making a purchase.

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An appliance warranty can cover a wide range of common household appliances such as refrigerators, ovens, dishwashers, hot water heaters, air conditioners, stoves, washing machines, and ceiling fans, as well as some more exotic items such as an ice machine or snow blower. If a specified appliance is covered by the warranty but damages happen, the homeowner should have the covered item repaired or replaced at no extra cost to the homeowner. What is a first-time home buyer curious about is the specifics of the coverage? While most warranties specify which items are covered, there are some items that the buyer should inquire about, especially for expensive or uncommon items that often are not covered by warranty companies.

For example, an American home shield warranty does not cover televisions, computers, fridges, or microwaves. However, these are often common household appliances that are installed in a household. Another good example is the garage. As an example, an American home shield will likely cover the garage door opener, but it will likely not cover the garage door opener itself, nor will it likely cover replacement parts for this common household item.

One item to ask about when researching home warranty plans is what the company considers to be “common” or “commonly owned.” Items such as a refrigerator are often deemed to be commonly owned simply because they are used on a daily basis. What is an appliance that is rarely used, but still receives a warranty, like a refrigerator, is considered “uncommonly owned” and therefore may not warrant a claim under the plan. This is important to know for refrigerators, because a refrigerator is not something that people keep to just for the winter months; it is also used for many other reasons, most of which are related to food preparation.

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For first-time homeowners, it is important to understand the difference between typical home warranties and warranty plans that specifically cover home systems. For instance, a typical home warranty coverage will cover air conditioners during the warmer months, or any other heating unit throughout the year. A more comprehensive plan covers these items, as well as any related components, and most likely would include a water heater.