Home Warranties – What You Need to Know

Home warranties can be an excellent investment for homeowners with old systems and appliances that are likely to break down. They’re especially beneficial in such instances. 

They may also prove useful to first-time homebuyers with no experience finding reliable contractors and limited emergency funds, though before purchasing one they should carefully evaluate all available options. 

Peace of Mind 

Be wary of home warranty providers that use the phrase “peace of mind.” Peace and piece are homophones; one refers to tranquility while giving someone “a piece” means you strongly disagree with them. 

Home warranties typically stipulate that covered appliances and systems be properly maintained to avoid incurring service call fees, which can become problematic as local repairmen typically contract with home warranty companies to handle service calls; as a result, you may not be able to use your preferred repairman for service calls. Policies can even cover outdoor areas 

If a home seller offers you a warranty for a new house, you should evaluate its cost-benefit ratio carefully. While investing in a warranty may help protect against large, unexpected repairs, read contracts carefully to compare prices, premiums, exclusions and coverage limits before making your decision. Depending on the size of your emergency fund it may be more financially prudent forgoing purchasing an extended warranty and building savings instead. 


Home warranties provide essential systems and appliances with coverage in case they malfunction due to normal wear and tear, making service calls unnecessary. Depending on which plan you select, coverage could include systems like air conditioning and furnaces; appliances like refrigerators and dishwashers; outdoor structures like pools or septic tanks. 

Each home warranty company offers their own contract, so be sure to read it closely in order to understand exactly what coverage there is and isn’t. For instance, one may cover plumbing leaks but not water damage caused by flooding or blockages from tree roots. Most companies also don’t let you select their repair technician but instead assign you one directly. 

Some home warranty providers provide sample contracts on their websites to provide an idea of what you can expect from a policy. Although these won’t match exactly, they can serve as useful guides. 


Home warranty companies frequently offer sample contracts to homeowners as a means of helping them understand exactly what coverage will include, including excluded repair causes and actions that voide coverage and maximum payouts per system or appliance. These documents may detail all these features of coverage in greater depth. 

Home warranty providers take on a calculated risk by collecting premiums from homeowners to cover unexpected repair bills, taking on premiums from them in return. They usually set limits for what will be covered for each item and may include deductible payments before taking over responsibility for covering it. 

Home warranties provide peace of mind to homeowners looking for peace of mind without worrying about their systems and appliances, especially older items with an established track record of breaking down. They’re also great tools for those who plan on selling their homes as it provides one year’s coverage while on the market. 


Reputation is of great significance in choosing a warranty company, like you can see with Consumer reviews, websites of state attorney general offices and other reliable sources can help you select a dependable firm. 

Find a company that provides 24/7 customer service. Be sure to read your contract carefully, ensuring you understand all costs and any reasons a claim could be rejected. 

Many states regulate home warranty companies through licensing authorities like the Department of Insurance or Department of Consumer Protection; others, like Texas and Arizona, may impose their own state-specific licensing rules. 

If you’re uncertain whether to purchase a home warranty plan, speaking to your real estate agent could be useful in providing guidance on this decision. Otherwise, Consumer Reports suggests using any money saved from opting out to save up for repair and replacement expenses – at minimum one percent of your home’s purchase price should go into an emergency savings fund for repairs and replacement expenses. 

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