Home warranties aren’t technically warranties, which are provided by a manufacturer. Instead, these products are service contracts for your home’s systems and appliances.

When a covered item breaks in your home, the warranty company sends a technician to repair the item and covers most of the cost. The homeowner pays a service fee to the technician, and if the repair is covered by the policy, the company will cover the cost of repair. If the item can’t be repaired, most companies assist with replacement.

Most companies have 24/7 service lines, so homeowners can report failures right when they happen. Companies with good service schedule technicians quickly and review the technician’s performance.

The type of plan most popular with homeowners is a combo plan, which combines coverage for systems and appliances in the home. A standard combo plan covers kitchen appliances, electrical, plumbing, washer, dryer, and heating and air conditioning systems.

Different companies cover different items, so it’s important to read the plan details carefully. Homeowners who want less comprehensive coverage can choose a systems-only or appliance-only plan. Items commonly covered under a warranty include:

Extra coverage is available for things like a pool and spa, sump pump, extra refrigerator, central vacuum, septic pump, standalone freezer, and tankless water heater. Adding these items requires an additional fee.

On any given item, a warranty has a limit, or cap, for coverage. The limit is listed in the policy’s terms and conditions, and it dictates the maximum the company will pay out for claims on that item. The limit on air conditioning, for instance, is commonly set at $2,000 per policy term.

Not Covered 

Home warranty coverage has a specific purpose: to help with mechanical failures from wear and tear. They aren’t meant to cover every possible failure, and each company has different limitations. Here are a few typical limits of coverage:

• Items under manufacturer’s warranty
• Maintenance, like changing AC filter and annual HVAC tune-ups
• Breakdown from rust, corrosion, or lack of maintenance
• Damage from weather, fire, or accidents
• Items that are exterior to the home, such as exterior wiring and plumbing.*

* Exterior items listed in the plan are covered (Ex: roof leakage, pool & spa, septic pump, etc).

With or without a home warranty, technicians charge a minimum fee to come to a customer’s home for repairs. This is called a service fee, sometimes referred to as a deductible.

With a warranty, the fee is set by the warranty policy, so homeowners pay the same service fee no matter how expensive the technician’s fee is. This allows homeowners to budget for repairs. Depending on the warranty company, this fee is paid either to the company or directly to the technician.

Service fees range from $45-$125, with most options averaging between $75 and $100. Plans with a higher service fee are generally cheaper than plans with a lower service fee. Plans with a higher service fee are cheaper, but customers with older homes may want to go with a lower service fee in case they need frequent repairs.

Workmanship Guarantee

When technicians make a repair, they often guarantee that repair for a stated period of time. That period of time is known as the workmanship guarantee, and if the repair fails during the guarantee, the technician will come out and complete the repair again free of charge.

Not every technician’s work guarantee is the same length, so home warranty plans help their customers by offering a standard work guarantee. If the repair fails during the guarantee, customers do not have to pay for repairs or pay the service fee.

Home warranties offer workmanship guarantee lengths between 30 days and the life of the plan, which can be over a year. A longer guarantee could be an indicator that the company uses better technicians who do quality work.