When a house is sold, the seller or real estate company may provide the buyer with a home warranty. A home warranty can also be purchased by a homeowner. This type of warranty is a plan that provides for repairs or replacements of certain components or appliances of a house. It is not the same as homeowner’s insurance, which may provide coverage in case of natural disasters, fires, or other types of damage to the structure and its contents. A home warranty typically lasts for one year, at the end of which the homeowner may renew the contract for another year.

What a Home Warranty Covers

Home warranty companies provide discounted repairs of the major systems of a house, including its electrical wiring, heating and ductwork, cooling, telephone systems, and plumbing. Some plans also cover major appliances like refrigerators, dishwashers, washers, and dryers. A basic home warranty plan usually covers only components that are located within the foundation of the main house and garage. In some cases, however, extended coverage can be purchased for items such as swimming pools and guest houses.

All systems and appliances covered by a particular plan are listed in the contract signed by the warranty holder. Any parts not specifically mentioned in the contract are excluded from coverage. Also excluded are any components that have not been properly maintained. Because proper maintenance can be a gray area, this is sometimes a matter of dispute between homeowners and warranty companies.

How do Home Warranties Work?

When a problem occurs with one of the components covered under a home warranty, the homeowner can call the warranty company to file a service request. The company will then dispatch an appropriate service provider, such as a plumber or electrician, to evaluate the issue. If this individual determines that the problem was caused by a lack of proper maintenance, then the request is denied. If the problem is covered under the warranty, then the provider will complete the needed repairs.

The Cost of Coverage for Home Warranties

Most home warranty plans cost a few hundred dollars per year, but the exact costs of different plans vary according to the extent of the coverage provided. This annual premium is usually paid up front, but some companies offer payment plans. In addition to the premium, a fee is charged for each service call. This fee is typically under a hundred dollars, but it must be paid even if the service request is denied.