How Does a Home Warranty Plan Work and Who Pays for It?

After closing, the last thing a home buyer wants is for their new home to break down, yet it does happen. Getting a home protection plan or warranty is an excellent idea, so you don't have to worry about it now—or in the future. If something goes wrong, it will cover the associated costs. If you're a first-time homebuyer with no experience with home maintenance, getting a home warranty is very important.

Who Covers the Cost of a Home Warranty?

Your local customs will determine whether the seller or the buyer pays for the home protection plan and warranty coverage. Because it's a seller benefit, it's common for a seller to pay for coverage in many areas. After the sale, the buyer will not contact the seller if something goes wrong. Many real estate agents will provide buyers with a home warranty as a closing gift.

What Is the Price of a Home Warranty?

These policies are reasonably priced, costing roughly a few hundred dollars per year, depending on the coverage and deductible. Home warranty providers occasionally conduct lower policy pricing or provide more coverage for the same price. In most cases, policies are pre-paid for a year. When they expire, the homeowner can renew them.

What Are Home Warranties and How Do They Work?

Some plans provide specific forms of coverage, but most work in the same way and have comparable language.
  • If a home system or appliance breaks or ceases working, the homeowner contacts the warranty company.
  • A provider with whom the home warranty company has a commercial relationship is contacted.
  • To schedule an appointment, the provider phones the homeowner.
  • The provider resolves the issue. Depending on the contract coverage, the home warranty company will pay to replace and install the appliance if it can't be repaired.
  • The homeowner pays a nominal trade service fee for a visit, ranging from $50 to $100. When you sign up for a plan, you can negotiate the price.

Home Warranty Protection

Because every plan is different, you should inquire about what is covered explicitly under your plan. Inquire with your real estate agent about updates, and see whether the house warranty company will cover repairs to bring particular systems or appliances up to code.

A Home Warranty's General Coverage

The following are some of the issues that are frequently discussed:
  • Air conditioning
  • Kitchen appliances
  • Washers and dryers
  • Doorbells
  • Furnace/heating
  • Water heater
  • Ductwork to code
  • Garbage disposals
  • Inside plumbing stoppages
  • Ceiling fans
  • Electrical systems
  • Range and oven
Ask to obtain a sample copy of a policy before you agree because the coverage for a home warranty plan might vary from state to state and policy to policy. Some people love house warranty programs, while others despise them.

What might not be included

Your policy will not cover every mishap or breakdown. Home warranties may not cover the following items:
  • Outdoor items such as sprinklers
  • Faucet repairs, although this can vary
  • Refrigerators, washers, dryers, or garage door openers
  • Spa or pools, unless specific coverage is requested
  • Permit fees
  • Haul-aways
  • Items that were broken before closing
  • Exclusions noted in the policy
  • Be sure to check your specific policy to learn what isn't covered.

What Can Cause a Payment Refusal?

It may appear that the corporation is intentionally looking for a strategy to avoid paying a claim, and this perception is sometimes correct. It could occur for a variety of causes, including:
  • Improper maintenance
  • A pre-existing condition disclosed in a home inspection
  • Code violations
  • Unusual wear and tear
  • Improper installation

What if You Don't Like the Result?

A service provider can deny a claim. If this occurs or you are dissatisfied with the service provided, contact your real estate agent and express your dissatisfaction. If your agent has an excellent working connection with the person from the home warranty business, they can help you find a solution. They could have some clout.

Frequently Asked Questions (FAQs)

How long does a home warranty last?

Home warranties often have a one-year expiration date, but this is something you'll learn about as you shop for one. If the expiration date is unclear, contact the warranty company for more information.

How do I know whether I have a home warranty?

Home warranties are sometimes thrown into closing deals to help tempt buyers, so you should check with the seller to see if one was included in the sale. Check your credit card and bank statements for insurance company payments if you don't remember whether or not you paid for your home warranty coverage.

How do home warranty companies make money?

Warranties are insurance policies that cover you if something goes wrong. You don't have to file a claim if nothing goes wrong, but the warranty company keeps the money you paid. When you acquire a home warranty policy but don't utilize it, the company makes money. A warranty company may lose money if too many clients begin to use their warranties.

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