The home warranty covers a home's systems and appliances that don't work due to normal wear and tear. Systems and appliances have a lifespan: unfortunately, they break down, wear out and stop working. They won't last forever, and there's a home warranty to help reduce the cost of paying for a new system or appliance when it breaks down due to old age (normal wear and tear). A home warranty is a service contract that helps cover the cost of repairing (or replacing) certain appliances and systems.
In exchange for paying a monthly or annual fee, you pay a fixed service fee every time an unexpected problem arises with, for example, your washing machine, refrigerator, air conditioning system, or the like. Generally, a warranty policy does not cover electrical problems that result from causes other than normal wear and tear, such as circuit overload, lightning strikes, power outages, or power surges. Damage to electrical systems due to accidents or natural disasters would be included in your home insurance and not in your home warranty. For example, if you have electrical cable damage due to plumbing problems, warranty coverage may not apply.
Securing home warranty coverage that covers electrical problems not only protects your home and family from uncomfortable and even potentially dangerous repair problems, but also protects your pocket from the unpredictable cost of service associated with daily wear and tear. While similar to homeowners insurance, a home warranty is different because it's an optional policy that helps cover the costs of inevitable breakdowns in the home's systems or appliances. Some companies offer several enhanced coverage plans, with an increasing number of items for higher-priced plans. Unlike what home insurance covers, home guarantees cover your home's systems and appliances, such as plumbing or air conditioning, rather than the structure or your personal possessions.
Most homeowners are familiar with homeowners insurance, which covers the structure of their home and personal belongings against damage caused by burglary, fire, weather and liability claims. Home guarantees don't usually cover problems that are discovered during a home inspection or that are due to inadequate maintenance. While individual appliances may initially be covered by manufacturers' warranties, these only last for a predetermined period of time. However, if your oven stove stops working, repair and replacement won't be covered by a home insurance policy.
Insurance means that insurance covers unexpected events that cause damage, while guarantees cover events that are somehow expected, such as aging and the definitive breakdown of appliances and systems. The good news is that home warranty plans cover systems, either as a standalone plan or in conjunction with an appliance plan. Home warranties for newly built homes typically have coverage time limits, such as 10 years for structural defects; two years for HVAC, electrical and plumbing systems; one year for walls and paint; and six months for appliances. There's a reason most home warranty premiums are so low: a home warranty can't cover all repairs.
With so many home warranty companies available that claim to offer the most comprehensive coverage, it can be difficult to find the best option for your situation. Basic home warranties generally cover parts and labor for repairing or replacing major home systems and equipment and some code updates. .