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A home warranty plan is a service contract between a homeowner and a home warranty provider. Home warranties cover essential home systems and appliances from normal wear and tear breakdowns. Once a home appliance or system fails, the homeowner files a service request with the provider. The provider then sends a service technician to fix the issue.
There are coverage exclusions and limitations a homeowner should be aware of before signing up for a home warranty. Our team compiled a list of the most commonly asked questions about home warranty companies. In addition, we conducted several surveys and a focus group to obtain our insights. For those interested in signing up for a home warranty, check out our list of the best home warranty companies.
What Does a Home Warranty Cover?
Home warranties cover core components found in your home’s systems and appliances. Although coverage varies by provider, covered items may include kitchen appliances and heating, cooling, and electrical systems. Most providers offer appliance-specific, systems-specific, or combination plans.
Before signing a home warranty contract with a provider, we recommend considering the home items you need to be covered. First, consider the systems or appliances you use most often. For example, if you live in an older home with an older HVAC system, you should consider a provider that offers solid HVAC protection. Also, think about the expense of replacing a system or appliance. If the cost of repairs for a broken major appliance or system outweighs the cost of a home warranty, consider investing in one.
What Doesn’t a Home Warranty Cover?
Every home warranty provider has unique coverage exclusions and limitations. Being aware of exclusions can save you from a denied claim. A few common exclusions are the following:
- Damage caused by fire, flooding, or natural disasters
- Defective units
- Misused systems and appliances
- Mold or hazardous materials clean-up
- Preexisting conditions
- Remediation costs
- Routine maintenance
Providers also have exclusions for covered systems and appliances. For example, most providers will not cover non-essential components of a system or appliance, such as dials, door hinges, or racks.
Providers also exclude coverage for certain types of systems and appliances. For example, AFC Home Club covers standard electric and gas water heaters but not tankless water heaters. Therefore, we recommend you thoroughly read a provider’s fine print before signing up so you are aware of coverage exclusions.
What Are Coverage Limits?
Home warranty providers establish limits on how much they’ll pay for covered repairs. Certain providers, such as American Home Shield and First American Home Warranty, offer high coverage limits per covered system and appliance. For example, American Home Shield’s ShieldPlatinum plan has a coverage cap of $6,000 per covered item.
Higher coverage limits come with a higher monthly premium. Consider your budget and the type of coverage limits you need. If a repair costs more than the limit provided by your provider, you are responsible for paying the difference.
Who Are the Home Warranty Company’s Service Providers?
Another common question is which contractors home warranty providers enlist to fix breakdowns. Reputable providers establish a network of licensed and bonded service providers and have a vetting process before sending them work. We recommend asking a provider how it vets contractors and handles subcontractors that do substandard work.
Also, ask whether the provider has available contractors in your area. If you live in a rural, off-the-grid, or mountainous area, there may be a delay in sending a service technician to your home.
Does My Home Warranty Company Allow Me to Choose My Service Provider?
Generally, most home warranty companies prefer to send an in-network technician to resolve your issue. However, if the available technician can’t fix your issue, most companies allow you to find your own technician. You must provide proof of repair and an itemized receipt to receive reimbursement.
Some companies, such as AFC Home Club, allow you to choose your technician once you file a claim.
What Does the Claims Process Look Like?
The claims process can vary depending on the home warranty provider. Some require you to call a dedicated claims hotline, while others offer multiple options to file claims. When choosing a home warranty, consider what you’re most comfortable doing: Do you prefer speaking with a live person or filling out an online form?
Second, verify how long a provider processes a claim from beginning to end. For example, emergency or after-hour service requests may take significantly longer than normal service requests. Knowing how a provider handles claims allows you to make a more informed decision.
Are Home Warranties Regulated?
Governmental and industry-related entities regulate home warranty providers. Regulation is in place to protect the consumer’s best interests. Many states have dedicated regulatory bodies that oversee providers. Some, however, don’t have a clear regulatory body. Consumers that own a home in such states can turn to other consumer protection agencies, such as their attorney general’s office.
Alongside state oversight, industry organizations regulate home warranty providers. Several entities, such as the National Home Service Contracts Association and the Service Contract Industry Council, provide lists of member providers and offer additional resources to serve homeowners.
Although home warranties may seem confusing, they can be an excellent investment for homeowners who want convenience and peace of mind. For a small monthly payment, a home warranty protects your home’s appliances, air conditioning, heating, electrical systems, and more. By carefully analyzing your specific needs and reading through providers’ sample contracts, you can decide if home warranty coverage is right for you.
Check out our list of the best home warranty companies in the United States for more information.
Frequently Asked Questions
What is a trade service call fee?
A trade service call fee, or service call fee, is similar to a deductible charged by an insurance company. Providers charge a service call fee when you file a new claim for a repair. Service call fees typically range from $65 to $125, depending on your provider and plan selection.
Do home warranty companies guarantee their work?
Yes, reputable home warranty providers offer a workmanship guarantee for completed repairs. The industry standard is a 30-day guarantee. If a repaired item breaks down during the 30 days following a repair, your provider will send a service technician to fix it for free (no additional service call fee). Some providers, such as Liberty Home Guard and AFC Home Club, offer a longer workmanship guarantee than the industry standard.
Do home warranties cover other types of home items?
Yes, home warranties offer additional coverage for home items other than common systems and appliances. For example, home warranties may cover pools and spas, septic systems, sump pumps, stand-alone freezers, well pumps, and more. Generally, providers cover these items as add-ons. Check your provider’s sample contract to see what add-on options are available.
Who do I contact if my state doesn’t have a clear regulatory body for home warranties?
Your state’s attorney general’s office is the best entity to contact if your state doesn’t have a clear regulatory body for home warranties. You can also check out this list of consumer protection offices. These state government entities handle complaints and take steps to protect consumers. If you need to file a complaint against a home warranty provider, the National Home Service Contract Association also forwards complaints to the appropriate third party.
How is a home warranty contract different from a homeowners insurance policy?
A home insurance policy covers items in your home damaged by incidents such as theft, fire, or storms. A home warranty policy covers items in your home that fail due to normal wear and tear. Both policies could save you a significant amount in repairs because they provide complementary coverage.
How We Chose the Top Home Warranty Providers
Our team reviewed and researched dozens of home warranty providers, thoroughly analyzed sample agreements, and identified customer pain points based on customer-review analysis and interviews with industry experts. Our in-depth methodology guides our review process to provide transparent information about the companies we review.
During this process, we determined that the most critical aspects of a home warranty company include available service plans and add-ons, depth of coverage, plan cost, industry reputation, customer support infrastructure, and additional features. We also focused on the ability to choose your own contractor; upgrade your coverage package; transfer your plan to another owner; and cover roof leaks, high-end appliance brands, ceiling and exhaust fans, and faucets and fixtures.
Our research supported that plan coverage should carry the most weight, with customer support as the second-most important factor. Industry reputation, plan availability, and additional features were rated equally. Therefore, we determined that price range, while worth considering, should not be the primary basis for choosing a home warranty provider for your home’s needs.