A home warranty can protect you from paying out-of-pocket costs if something goes wrong with your home’s systems or appliances, but only if you have the coverage you need. All home warranties have exclusions, and it’s important to understand what’s covered and what isn’t to avoid any surprises.
Every provider and policy is different, but you can start by understanding common exclusions and things to look out for in your contract. This will help you choose the right home warranty company for you, and also help you understand your next steps if you have a policy and have a problem.
What is a home warranty?
A home warranty is insurance that covers repairs and replacements in the event something breaks down in your home, for which you pay a monthly or yearly premium. They include:
- major home appliances
- countertop appliances
- Air conditioning equipment
- electrical equipment
- piping parts
- pool and spa
- windows and doors
- Well pumps and septic tank pumps
- etc.
Unlike home insurance, a home warranty covers problems that occur as a result of deterioration or early failure, rather than unexpected disasters such as floods, falling trees, or fire.
General Home Warranty Exclusions
All home warranty policies have exclusions. Understanding what your policy covers and what it doesn’t will help you choose the right provider for your needs, and also help you take the appropriate steps to get your appliances and systems back up and running in the event of a disaster.
existing symptoms
Most home warranties exclude pre-existing problems with covered appliances and mechanics. Many companies have a waiting period before coverage begins to discourage people from signing up for coverage for known issues. Testing may be required before insurance coverage to ensure there are no pre-existing problems.
Improper installation and inadequate repair
Many home warranty policies also exclude problems caused by improper installation, non-compliant installation, and even improper repairs. Some products require the maintenance history of the covered item before agreeing to coverage.
Negligence
If the technician finds that the damage was the result of negligence or lack of regular maintenance, many companies will exclude the unit from coverage. Required maintenance includes:
- Regular replacement of HVAC filters
- Regular maintenance of home appliances
- Annual HVAC tune-up
intentional damage
Most insurance policies exclude intentional damage caused by the homeowner. This exclusion protects home warranty companies from homeowners who intentionally deface or damage appliances or home system components in order to obtain replacements.
Note that vandalism is also usually excluded. However, that’s because your homeowner’s insurance will often cover it for you.
Cosmetic damage
Cosmetic issues that do not affect the functionality of the unit are generally not covered under a home warranty. This can include scratches, dents, peeling paint, and even mismatched units if you need a replacement that doesn’t match other appliances under warranty.
Partial roof repair
Most home warranty policies that offer roof coverage only provide limited coverage for minor repairs, such as:
- sealing fastener
- Minor repairs to flashings around chimney and roof vents
- Replacement of asphalt shingles with a certain area or less
Policies typically exclude storm and weather damage, existing leaks, leaks in non-residential areas such as garages, and surface damage and structural components.
System-specific components
Most home warranties cover appliances, home systems, or a combination of the two, but warranties within these categories are not complete. Policies vary, but please note the following general exclusions: This list is not exhaustive, so always check your contract carefully.
- second refrigerator
- freestanding freezer
- window air conditioner
- portable air conditioner
- humidifier or dehumidifier
- AC refrigerant
- Non-traditional heating systems (such as ductless or geothermal)
- Non-conventional water heaters (such as solar water heaters)
- Septic tank (even if the septic tank is covered)
- septic tank pump
Be sure to read the sample contract and look for excluded items within the covered items. Home warranties may exclude certain components within the covered system or damage due to certain underlying causes.
“One of the most overlooked gaps in home warranties has to do with outdoor water and sewer service lines on the homeowner’s property,” says Elizabeth Shavers, director of IHT and safety at Oncourse Home Solutions, an Illinois-based home warranty provider. “Many homeowners think that if they have a home warranty, these underground pipes are already included, but most standard home warranties do not cover them.”
Issues covered by insurance or other guarantees
“Home insurance protects against sudden, catastrophic, and unforeseen events like fires and storms,” says Shavers.
This is worth noting because home warranties almost always exclude issues and damages that should be covered by home insurance. It also often excludes components and repairs covered by the builder’s warranty or manufacturer’s warranty. That can include damage from hurricanes, tropical storms, tornadoes, flooding, vandalism, seismic activity, wildfires, and accidental house fires.
Contents of home warranty
Most home warranties cover major kitchen appliances, major home systems, or a combination of the two. Common items found in home warranties include:
- refrigerator
- oven/stove
- cook top
- dishwasher
- small kitchen appliances
- Garbage disposal
- washing machine/dryer
- Piping systems and equipment (excluding leaks in some cases)
- water heater
- electrical system
- Air conditioning equipment
- Pool and spa facilities
- well pump
- septic tank pump
- Roof (limited scope of application)
- garage door opener
- Ceiling fans and other appliances
Some companies offer other compensation, such as rekeying after a lockout, recharging AC refrigerant, and coverage for violation of terms. Be sure to read your plan’s list of coverages and check your contract for provisions and exclusions before signing up.
Which home warranty offers the most comprehensive coverage?
In our review of the best home warranty companies, HomeSafe received the highest score for comprehensive coverage. The company has three plan options, with the Best Home plan covering most appliances and systems. This includes:
- Air conditioning and heating systems
- refrigerator
- Ice maker and stand-alone freezer
- washer and dryer
- dishwasher
- garbage compactor
- oven and countertop
- built-in microwave
- Built-in food center
- garage door opener
- electrical system
- piping system
- water heater
- water server
- Garbage disposal
- central vacuum cleaner
- smoke detector
- ceiling fan
- doorbell
- (Additional) Well pump
- (Additional) Septic tank system
- (Additional) Pool and Spa
- (Additional) Water softener
- (Additional) Wine cellar
- (Additional) Guest house
- (Additional) In-row suite
This plan also has high coverage limits, including a maximum payment of $5,000 for home systems and a maximum payment of $2,000 for appliances.
Please note that this is just one option. We recommend researching several providers to find the one that is best for you.
“Look for a home warranty company that has a strong track record of responding to contractors in a timely manner and can resolve or repair specific issues as quickly as possible,” says Todd Tripp, home repair specialist at Just Answers. “It’s important to have a good communication and follow-up system with someone you can talk to to initiate and follow up a warranty claim.”
Home Warranty Coverage Limitations
Most home warranty policies have coverage limits that cap the cost of repairs or replacements on an annual basis, a lifetime basis, or both. Maximum payouts may be displayed for each item or category. Many companies also have total coverage that limits the total amount the company will pay across all categories.
Some companies may have one limit for appliances and another limit for home systems. Coverage limits for appliances average $1,000 to $2,000, while coverage for home systems averages $3,000 to $4,000. In rare cases, there may be no coverage limits for certain categories, such as in the case of super home warranties.
Bottom line: Do you need a home warranty?
“A home warranty isn’t a bad idea, but you need to read the policy carefully,” says David Coleman, a handyman who runs an Instagram account (mechanicallyincleyend). “It is important to fully understand what is included and excluded to be financially prepared.”
Be sure to read the sample contract before signing up for coverage.
Home warranties are especially helpful for homebuyers who want to reduce out-of-pocket costs immediately after closing, and for homeowners with aging systems who don’t have emergency funds for repairs or replacements.
If you are considering applying for a home warranty, be sure to obtain a sample contract from your provider and read it carefully. Be aware of exclusions and coverage limits, and be sure to read the fine print to avoid unexpected charges or claim denials.
FAQ
What voids my home warranty?
A variety of factors can void your home warranty, including damage caused by improperly installed appliances and systems, age, lack of maintenance, or failure due to pre-existing problems. Additionally, most home warranties do not cover intentional or cosmetic damage, and some may void future warranties if serviced by a technician who is not affiliated with the home warranty provider.
Why do home warranty companies deny claims?
Home warranty companies can deny claims for a variety of reasons, which vary depending on the provider and the specific plan you choose. The Company will deny claims for items not covered by the Plan, damage intentionally caused by the homeowner, damage that should be covered by insurance or other warranties, cosmetic damage, or damage caused by poor maintenance or improper installation. Read your contract carefully to find out all the reasons your claim could be denied.
What is the difference between a home warranty and home insurance?
A home warranty is optional coverage for home systems and appliances, specifically covering breakdowns and repairs caused by everyday use. Although most lenders require it, home insurance is an option and is intended to cover unavoidable losses caused by natural disasters or serious accidents, such as storm damage or house fires. Home warranties also have much lower coverage limits and typically require an out-of-pocket service charge, whereas home insurance is intended for full coverage and uses a deductible rather than a service charge.
