Homeownership comes with a long list of responsibilities. The most common is ensuring all your appliances and household systems are in good working condition. Unfortunately, the risk caused by unwanted failures or major system breakdowns is always around. And because having these repaired or replaced when needed means additional expenses, a home warranty has become a must-have among household owners.
But despite its popularity, many homeowners still don’t know how a home warranty works. So, if you belong to the uninformed group, you should research home warranties soon. For a start, you can consider reading the following information.
Home Warranty vs. Home Insurance
Although a home warranty and home insurance share a lot of similarities, this doesn’t mean that they are the same. Home warranties are designed to cover most of your home appliances and internal components if they get damaged due to continuous use.
In short, home warranties are home service contracts that cover the items’ replacement, service, and repair. This is a popular option for homeowners without savings to cover the expensive and unexpected repairs of household systems and appliances.
On the other hand, home insurance is designed to cover the expenses incurred from the damages to your property caused by major events like vandalism, burglary, and natural disasters.
Due to these differences, homeowners are strongly encouraged to secure home warranties and home insurance. Both are designed to protect homes and give owners peace of mind.
Home Warranty Inclusions
Generally, the coverage included in home warranties vary from one provider to another. However, most of these warranties are intended to cover a range of inclusions like home appliances and some built-in systems.
As a matter of practice, many providers offer a basic plan that covers the appliances or the built-in systems alone. However, they also provide a more comprehensive and expensive plan that bundles the coverage intended for appliances and built-in systems.
Thus, if you are planning to secure a home warranty, it is best to read the fine print to know which appliances are covered and which are not.
Presently, the following are the appliances and systems that are commonly covered by home warranties.
Appliances
- Refrigerator
- Clothes Washer and Dryer
- Range/ Cooktop/ Oven/Stove
- Microwave
- Garbage Disposal
- Dishwasher
Built-in Systems
- Water Heater
- Air Conditioning
- Stoppages
- Plumbing System
- Electrical System
- Ductwork
- Heating System
Home Warranty Exclusions
Not all appliances and features found within the home are covered by the basic plan offered by many home warranty companies. Some of these can be included in the warranty coverage after paying extra fees. However, the following are the most common features not usually covered by home warranties.
- Appliances damaged due to Acts of God
- Damages caused by homeowner’s neglect
- Problems arising due to deferred maintenance
Home Warranty Cost
Home warranties are typically offered either as monthly or lump sum payment plans. The cost of a home warranty varies according to the items included and the other factors. However, the average annual home warranty cost ranges from $360 to $1,425.
But according to Kathryn Parkman from consumeraffairs.com, the average monthly cost of a basic plan is $36.32 per month while that of comprehensive coverage has an average payment of nearly $69 per month.
The good thing is that most home warranties do not only cover repairs but replacements as well. Thus, when an appliance covered is already irreparable, the warranty provider will replace this as long as the fine print says so.
