Home Warranty Policies: System and Appliance Coverage
A Home Warranty Personal Experience
December 29th, 2006 is a Saturday etched deep inside my brain. It is a day I shall never forget. My husband and I had just purchased our new home located in the San Francisco, California East Bay Area. It was a few days before the New Year. We wanted New Year’s Day to be a day of celebration, so we worked diligently to move furniture and unpack boxes.
Finally! It was 8:00 p.m. and we were almost settled in. We decided to save whatever little unpacking we had to do for a later day. It was one of the coldest nights in the history of the season and we were starting to get a little chilly. We needed heat, so my husband went to turn on the furnace and…
…nothing happened. We could see that the pilot was lit, but no heat was coming out of the furnace. “What are we going to do?” I asked. I was so cold my teeth were chattering. We had waited too long to get the house warmed up. “Well, my dear..." my husband turned to me and said, “It’s a good thing we have that home warranty.”
Indeed, it is a good thing we had a home warranty. The home warranty company had a 24-hour hotline, so we called to schedule a service. Because it was a holiday weekend, we were not able to get service until the following Monday. We were alright with that because we knew if it were us, we would not want to go on a service call during the holidays. Our patience meant that we would have to find other means to keep warm until the service technician could come out to diagnose the problem. It was cold, but we were happy in our new home.
Having a home warranty meant that we could call for service, pay a small fee, and get our furnace repaired or replaced. We were satisfied with the service, but later in this article, I will share a personal experience about what can go wrong even if you have a home warranty contract. I will also shed light on some things to be aware of home warranty contracts.
Anyone Can Pay for the Home Warranty Service Contract
I have been involved with transactions where the buyer wants a home warranty service contract but wants the seller to pay for it. The seller refuses to pay so I pay for the warranty myself. I don't mind giving up a little commission to make sure the buyer moves into the home with the protective service of a home warranty.
What is a Home Warranty?
A home warranty is a contract for service with a standard term of one year which is renewable at the end of each term. Homeowners buy home warranties to protect them against the cost of unforeseen repairs to home appliances and household systems. At the time the home warranty is issued, the appliance is presumed to be in good working condition prior to the start of the contract.
As a real estate broker, I insist on the buyer having a home warranty before they take occupancy. The buyer or seller can purchase the home warranty contract, however, in my region, it is customary for the seller to pay for this service. The concept behind this custom is that the seller is willing to pay money as a gesture to state that the appliances and systems are in working condition at the time of the sale. Should a buyer move in and find, for whatever reason, something does not work, the buyer can use the home warranty to bring the item into working condition.
What is Covered in a Home Warranty Contract?
Home warranty coverage varies by company, so it is important to compare contracts to assure you are comfortable with the appliances and household systems covered by the contract.
Home warranties typically cover mechanical, plumbing, and major appliance repairs that homeowner’s insurance doesn’t cover. The type of homes covered are residential single-family homes (including manufactured housing), new construction homes, condominiums, townhomes, and mobile homes. Homes must be owned or rented as residential property, not commercial property. Homes must be less than 5,000 square feet.
My husband and I had an old heater and air conditioner covered by a home warranty contract. The heater went bad and was replaced by the home warranty agreement, however, the contract did not cover code changes, therefore it cost us about $5,000 to replace the compressor because the time the original heater and air conditioner were installed, the county made some code changes, making it so that the connections to the heater no longer conformed with the current county code stipulations.
Read your contract carefully. Be aware that the contract may stipulate that the home warranty company is not responsible for industry or local specification requirement changes. In other words, an appliance that may have been covered at the beginning of the contract may no longer be covered due to county ordinance or code changes.
Definitely check to see which appliances and services are covered. More than that, check to see if the home warranty contract covers the full replacement cost of an item.
Home Warranty Companies
My experience with home warranty companies is that in a side-by-side comparison, they all operate fairly the same, servicing the same appliances and systems, but offering varying combinations of coverage and prices. Customer service is excellent with no one company standing out among the others.
I have outlined the home protection service plans of two prominent home warranty companies. These two companies represent the general concept and the type of offers you can expect to see when you visit home warranty company websites or when you call to speak to a representative.
Disclaimer: While the following information is reliable, it is not meant to be depended upon for making a selection. All home warranty companies differ in what they have to offer and the prices they charge for their services. Use this information to give you an idea of what you can expect to see when searching for your home warranty policy.
American Home Shield
American Home Shield has two basic plans and you can pay monthly for their service.
- The Combo Plan is a general plan that provides coverage for many of the main appliances and systems in your home.
- The Build Your Own Plan lets you select 10 or more covered items so that you can get only the coverage that you feel is most important for you.
Old Republic Home Protection
Old Republic Home Protection has three basic plans and you pay upfront for the entire year.
- Standard Coverage Plan: Covers basic appliances and systems in your home.
- Ultimate Protection Plan: Covers everything in the Standard Coverage Plan, plus refrigerant recapture, reclaim and disposal, code upgrades, permits, haul away, cranes, improper installation, and mismatched systems.
- Platinum Protection Plan: Covers everything in the Standard Coverage Plan and the Ultimate Protection Plan, plus increased coverage for plumbing items, increased coverage for stoppages, modification (with Additional Code Upgrades), and increased coverage for specific HVAC (heating, ventilating, and air conditioning) systems.
Home Warranty Appliances and Systems
The following table of home warranty appliances and systems shows what you can expect to have covered in a home warranty service contract. There are no hard and fast rules for what is labeled as an appliance and what is labeled a system. Each company has its own criteria for labeling appliances and systems. Your personal contract will outline the specific details of your service. Generally, home warranty companies list appliances and systems as shown below.
Note: Some items are shown as both an appliance and a system. For example, the plumbing associated with a dishwasher would be covered as part of the appliance service.
Home Warranty Appliances and Systems Table
Generally, the following household appliances are replaced, or the broken components are repaired:
Generally, the following household systems are replaced, or the broken components are repaired:
Generally, the following household appliances and systems are not covered in a basic contract, but can be added on:
Instant Hot/Cold Water Dispensers
Air Conditioning, including ductwork
Heating, including ductwork
Limited Roof Leak Repair
Instant Hot/Cold Water Dispensers
A personal quote for my modest home is as follows:
- Monthly Cost: $36.33
- Trade Service Fee: $100
Note: If I were to lower my trade service fee to $75.00, then my monthly cost would increase to $42.83.
How Much Do Home Warranties Cost?
The cost varies by company, so you must call or visit the company’s website to obtain a quote that will provide the service you need. Below (for the two company examples shown in the above paragraph, "Home Warranty Companies") are some prices you will see when you visit the website.
American Home Shield Warranties
- Appliances Plan: $22.17 per month
- Systems Plan: $25.67 per month
- Combo Plan: $36.33 per month
- Build Your Own Plan: $29.92 per month (For 10+ appliances and systems.)
- Trade Call Fee: $75, $100, or $125 per diagnostic visit (You choose the price; the lower the trade call fee, the higher the monthly fee.)
Old Republic Home Warranties
- Standard Protection Plan: $275 per year
- Ultimate Protection Plan: $385 per year
- Platinum Protection Plan: $485 per year
- Trade Call Fee: $60 per diagnostic visit
How Does the Home Warranty Service Work?
The process is easy. Either call the service number or go online to place an order for service. Very shortly after you order a service call, the service process begins:
- The home warranty company will assign a local pre-screened repair technician to your home. The technician will call ahead of time to schedule a time for service.
- You pay a small service fee which is predetermined at the time you establish your policy. This fee generally runs in the ballpark of $50 - $125.
- The appliance or system is repaired or replaced.
There is nothing more to do.
Beware of the Following Disclosures
Most people tend to ignore the information at the bottom of the page in small grey print. Save yourself some disappointment by making sure you read the fine print. Be sure to read about the following disclosures:
- The trade service call fee: This fee applies to the initial visit by a contractor for each covered trade. This is the fee you pay to have a contractor come to your home to diagnose a problem. The trade service call fee is a fee that is selected and stated at the time you sign your contract.
- The replacement policy: Appliances and system components will be replaced with units having comparable features, not necessarily the same dimension, color, and/or brand. There may be additional charges for some repairs and replacements. The home warranty company may provide cash back in lieu of repair or replacement in the amount of the home warranty company’s actual cost to repair or replace such items, which in most cases may be less than the actual retail pricing. Any item designated by the manufacturer as for commercial is not covered.
- State or local taxes: In your state or county, sales taxes may apply. The rate shown may or may not include such taxes, so you want to make sure to inquire about any applicable taxes.
If you have questions about your coverage, it is wise to contact your home warranty company and speak with a representative.
Read the Contract
The contract is where you will find the details of your home warranty coverage. Be aware that even though items may be listed as covered, some components of the item may not be covered. For example, some policies list the doorbells as being covered. All of the components and parts of the doorbell are covered except when the doorbell is part of an intercom system.
Be aware that if your appliance or component is located behind obstructing walls or floors, there may be an additional cost to you. In addition, the home warranty company may not return the wall or floor to the exact style of the original.
If permits are required, the home warranty company may offer to pay up to a limited amount.
Read the entire contract before signing, paying particular attention to print that is bold or grey.
The Home Insurance Policy Versus the Home Warranty Contract
Often, people think that if they have a home insurance policy they do not need a home warranty contract. The truth is, there is a difference between these two home protection services. In order for your property, your home appliances, home systems, and your personal belongings to be repaired or replaced, you should consider having both a home insurance policy and a home warranty contract. With both type of services in place, your house and home operation features can be repaired or replaced (depending on the agreement you sign with the company).
What Does a Home Insurance Policy Cover?*
- Home insurance policy coverage example: If you drop a hot skillet onto your kitchen floor and burn the floor, the insurance policy would cover the cost of repair or replacement of the floor.
- Home insurance policies cover the structure of your home and the personal belongings that you store in your home. If there is an accident or covered peril (such as a hail storm), a home insurance policy is designed to repair or replace the damage or loss.
What Does a Home Warranty Policy Cover?*
- If your clothes washer were to spring a leak, the home warranty contract would cover the cost of repair or replacement of the washer.
- Home warranty contracts cover your home appliances and systems that fail due to normal wear and tear.
*Examples assume your policy or contract includes this item as part of the agreement that you signed with your insurance company or your home warranty company.
Home Warranty Service Contracts Can Save You Money
Home repairs or replacements can cost hundreds or thousands of dollars. Protection by a home warranty service contract can be a cost-saving benefit, helping you manage the cost of repairing or replacing broken items. Appliances and home systems can break down due to normal wear and tear. Oftentimes, this happens at the worse possible moment. If you do not have a home warranty contract, this could leave you in a situation where you would have to do without the item or unexpectedly spend money to repair or replace that item.
It is difficult to budget for every possible outcome and with a home warranty service contract you can give yourself a little peace of mind, knowing that if something goes wrong, you can have it repaired or replaced for no additional cost, or at the most, a minimal cost to you.
If anything can go wrong – it will.— Edward A. Murphy, Jr.
How Do I Obtain a Home Warranty Service Contract?
To obtain a home warranty service contract, you can simply call or visit the website of the home warranty company. In most cases, a representative will contact you to show you options and quotes for their service.
Listed below are four companies that I have personally used as my home warranty company or my clients have chosen to use them. I find them all to be equally satisfactory in terms of customer service and technical service.
- American Home Shield, 1-855-210-9540, last visit to website September 1, 2015.
- Fidelity National Home Warranty, 1-800-TOCOVER (1-800-862-6837), last visit to the website, September 1, 2 015.
- Old Republic Home Protection, 1-800-445-6999, last visit to website September 1, 2015.
- Home Warranty of America, 1-888-429-7359 | In California 1-888-325-5143, last visit to website September 1, 2015.
Compare services before making a choice. All of the above companies will send you a free quote and a sample service contract for you to review prior to signing up for anything.
Get Help With a Comparison Website
In this article, I have provided you with information about home warranty companies that I am personally familiar with. There are many other reputable home warranty companies to choose from. If you need help in getting started, visit HomeWarrantyReviews where you can search for and compare various home warranty companies and then choose the one that is right for you.
Note: I receive no compensation for the mention of any of the companies referenced in this publication or the following video.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
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© 2015 Marlene Bertrand