What Does a Home Warranty Cover?
A home warranty is a service contract that helps cover the cost of repairing or replacing major home systems and appliances. Understanding what a home warranty covers is crucial for homeowners looking to protect their investments and ensure peace of mind. Here’s a detailed look at what you can expect from a home warranty plan.
Coverage Basics: Home Systems and Appliances
Systems Coverage
A systems-only home warranty plan usually covers essential home systems, including:
Heating: Covers the heating system, including the furnace and ductwork.
Cooling: Includes central air conditioning systems and associated components.
Electrical: Covers electrical systems, including wiring and electrical panels.
Plumbing: Covers plumbing systems, including pipes, faucets, and drains.
Water Heaters: Includes coverage for standard water heaters and sometimes tankless models.
Appliances Coverage
An appliance-only plan typically covers:
Oven/Range/Stove/Cooktop: Repairs or replacements for cooking appliances.
Dishwasher: Covers the dishwasher's mechanical and electrical parts.
Washer and Dryer: Includes both washing machines and dryers.
Built-in Microwave: Covers built-in microwaves, not countertop models.
Garbage Disposal: Repairs or replacements for garbage disposal units.
Garage Door Opener: Covers the mechanical components of garage door openers.
Add-On Options for Extra Coverage
Many home warranty providers offer add-on options for additional coverage. Common add-ons include:
Pool and Spa: Coverage for pool and spa equipment.
Septic Pump: Covers septic tank pumps and related components.
Well Pump: Includes well water pumps.
Limited Roof Leak Repairs: Covers specific types of roof leaks.
Understanding Service Agreements and Exclusions
What is Included?
To understand what your home warranty covers, carefully review your service agreement. This contract details what is and isn’t covered, along with terms such as when the coverage begins. It’s crucial to note the coverage limits, which cap the amount the company will pay for repairs or replacements. For instance, if your oven breaks down and the repair limit is $500, you’ll have to cover any costs above that amount.
What is Not Covered?
Home warranties do not cover everything. Common exclusions include:
Areas Outside the Main Home: Such as underground pipes or sewer lines unless added to your coverage.
Large Homes: Homes larger than 5,000 square feet may require additional coverage.
Pre-existing Conditions: Issues that existed before purchasing the warranty.
Outdoor Plumbing: Unless specifically covered for an extra fee.
Improper Maintenance: Systems or appliances not properly maintained or installed.
Commercial Properties: Properties used for business purposes, like bed-and-breakfasts or daycares.
Cosmetic Damage: Damage that does not affect the functionality of the item.
Pest-Related Damage: Damage caused by pests.
Will a Home Warranty Replace an Item if it Can’t Be Repaired?
Yes, if an appliance or system can’t be repaired, a home warranty often covers its replacement. However, the amount covered for a replacement might be less than the actual cost of a new item. For example, if your dishwasher needs replacing and you spend $1,000 on a new one, your warranty might only reimburse $500. Additionally, this reimbursement might not cover taxes, shipping, or installation costs, meaning you could still pay out-of-pocket.
Common Reasons for Denied Claims
Home warranty companies may deny claims for various reasons, often detailed in your service agreement. Common reasons include:
Non-included Items: The item is not included in your plan.
Improper Maintenance: The malfunction is due to improper maintenance, installation, or modification.
Commercial Use: The item is in a structure used for business purposes.
Weather Damage: Damage or malfunction is caused by weather events like floods or fires.
Pest or Pet Damage: The failure is due to pest or pet damage.
Coverage Limits Reached: You have reached your coverage limit for previous claims.
Understanding what a home warranty covers and the potential limitations can help you make an informed decision about whether this type of coverage is right for your home. Always review your service agreement thoroughly and consult with a home warranty provider to ensure you get the coverage that best suits your needs.
