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HOME WARRANTY

Home warranties can help homeowners guard against large unexpected bills when things such as major appliances and pipeline failures. Before you choose a plan be sure to remember the golden rule of home warranties: Read every word of the contract before signing up. And maintain a clear understanding of the pros and cons. Your home warranty policy is meant to keep you from paying big for unexpected fixes, but there are many limits. If you have realistic expectations about what your home warranty can do for you, you may find that the peace of mind is worth the price.

Best Home Warranty for Customization: American Home Shield

AHS has a build-your-own plan that was the only one of its kind in my search. Customers can also raise or lower their service fee, which helps them control the cost of their plan. Of the companies I investigated, American Home Shield also made it easiest to get a quote — I only had to input my email and street address. The claims center is open 24/7, and there are no exclusions for older homes and appliances.

Best Home Warranty for Transparency: TotalProtect

Customers can add a wide range of additional items to TotalProtect base plans, and service fees are customizable. Better yet, of all the companies I surveyed, TotalProtect made it the easiest to access contracts by clearly linking to them at the bottom of each plan’s description.

Best Home Warranty for Low Fees and Limited Exclusions: Complete Appliance Protection

On top of its lack of fees, Complete Appliance Protection also doesn’t exclude items from coverage because of a lack of maintenance, which is common among other home warranty providers. Customers can choose from four coverage levels and add on items as needed.

Don’t confuse home warranties with home insurance, which protects your home and its contents from natural disasters, fire, and other major calamities. Mortgage lenders usually require you to purchase home insurance.

Home warranties, meanwhile, help guard against big bills when things such as appliances and pipe mendings unexpectedly fail. They are generally not a lender requirement. Read on to discover the particulars of home warranty coverage, including costs, common exclusions, and general pros and cons.

What does a home warranty cover?

Home warranty coverage will vary according to the type of plan you choose and whether your home is a new build or dozens of years old.

For new homes, a home warranty from your builder typically covers any big structural defects for as long as a decade. Heating and air conditioning, drywall, paint, appliances, pipe mendings, and electrical work may be covered anywhere from six months to two years.

For existing homes, warranties typically fall into a few categories:

• Appliance-based plans: These typically cover appliances including your range, oven, built-in microwave, dishwasher, washers, and dryers. Refrigerators may or may not be covered.

• Systems-based plans: These plans focus on heat, air-conditioning, pipe fixtures, electric, and water heaters.

• Hybrid plans: As their name suggests, hybrid plans combine appliance and systems coverage, but are pricier because they are more comprehensive.

• Add-ons: Most home warranty companies give you the option to add on coverage for special items not covered under typical plans. Common add-ons include pools, wells, whirlpools, spas, and septic systems.

Home warranty terms: Reading the fine print

There’s always a chance your fixtures and mendings won’t be covered, which is a common complaint among home-warranty customers. Of course, you can help guard against this scenario by reading your policy contract extremely carefully. Here are a few things to look for:

• Coverage limits: You will select which appliances or systems you want covered, but you’ll still need to look very carefully at exclusions. For instance, your garbage disposal will be covered, but not for damage if something other than food is stuffed down it. Your clothes washer will be covered, but its leaky seal is not. Your refrigerator is covered, but only if it’s actually in your kitchen, and specifics like your ice maker may be excluded.

• Unexpected fixes only: An important point to keep in mind, especially for older homes, is that home warranties are typically intended to cover unexpected fixes. Many plans won’t cover routine service or problems that are the direct result of incomplete or improper maintenance.

• No pre-existing conditions: Your home warranty probably won’t cover any problem that exists at the time you purchase your policy. So if you’re hoping to fix your ancient, already-inoperable stove with home warranty coverage, you’ll be out of luck.

• Waiting period: There may be a period of 15 or 30 days before your coverage takes effect. This may be waived if you can prove you had previous home insurance with no lapse in coverage, and it probably won’t be the case if you’re buying a home that’s already covered.

• Service restrictions: If you hire a service provider on your own instead of going through your home warranty company, you probably won’t be reimbursed for that work.

How much does a home warranty cost?

The price of a home warranty depends on what type of property you need covered — for instance, whether you live in a condo or a single-family home — and whether you stick with a basic plan or buy an upgraded version. Basic plans typically range from $350 to $500 a year, according to Angie’s List; souped-up plans can cost as much as $800. On top of the cost of the plan, you will also have to pay a service fee or deductible of roughly $50 to $125 each time you need something fixed. If you’re buying a newly built home, the cost of your home warranty may be rolled into the purchase price of your home. That was the case when I moved into my new home, and it turned out to be a nice perk. You may also find that if you’re buying an existing home, the seller or real-estate agent may throw in a home warranty plan to sweeten the deal — if this isn’t already a part of the offer, see if you can get it thrown in.