Your Checklist For Home Warranty Coverage

Homeowners can protect themselves from expensive repairs and replacement costs for home systems and appliances if they break down if they have a home warranty. Coverage varies among companies and plans as well as by region, but most policies cover all the major home systems, such as air conditioning, heating and plumbing, as well as major appliances such as stoves, ovens, cooktops and water heaters. Some, but not all, cover refrigerators, washers, dryers and garage door openers.

As with any contract, it’s extremely important to read the fine print to fully understand what your home warranty covers and what it doesn’t, and it’s best to do this before you make a commitment to buy. Here’s a basic primer that will help you be a more informed consumer:

1. Replacement Policy

If the warranty company determines that your equipment needs to be replaced, coverage typically does not apply to a brand name, just a model similar in features. In the case of an air conditioning unit, you would get a system with the same ratings, size and efficiency of the system being replaced. However, some home warranty companies will allow you to upgrade to a more expensive brand as long as you pay the difference or provide a claims credit.

2. Lack of Maintenance or Pre-existing Conditions

One of the most common complaints is that a home warranty company rejects a claim because of lack of maintenance. The equipment must be maintained properly to receive coverage for system or appliance failures under most home warranty plans. To prevent this, be fully informed about the warranty you’re thinking about buying and what it does and does not cover.

As a rule of thumb, most home warranty plans do not cover system or appliance failures if you do not properly maintain the equipment. Plans typically do not cover mechanical breakdowns that result from mold or mildew, and sometimes rust or corrosion. This is why it’s so important to keep your appliances clean! See our spring cleaning tips.

Also, many home warranty plans will deny coverage because of pre-existing conditions such as past failures to properly install or modify equipment.

If you are buying a house —especially an older house — and you want to purchase a home warranty with these exclusions, it’s important to know the condition of each of the covered home systems and appliances before you sign the contract. A home inspector or qualified contractor (HVAC, plumbing, electrical) can walk you through this and identify any pre-existing conditions or maintenance negligence.

3. Manufacturer’s Warranty and Incidental Costs

Home warranty plans are secondary to a manufacturer’s warranty. If your brand new oven quits working, it is the manufacturer’s responsibility to repair or replace it. If labor isn’t included, then your home warranty would cover this cost after the standard deductible.

Some, but not all home warranties also cover incidental costs associated with bringing systems up to code, getting a permit, disposing of old equipment, modifying new equipment to work with existing equipment or gaining access to covered equipment to service it (e.g., excavating to get to a well pump or concrete encased plumbing).

4. Other Damages

Home warranty plans do not cover secondary damages. That means if an appliance fails and causes damage within your home (e.g., your dishwasher floods the kitchen and ruins the hardwood floors), the home warranty company is only responsible for the cost of repairing or replacing the dishwasher — not for the cost of any resulting damages. Homeowners insurance would cover the other incidentals. For a more detailed breakdown of how home warranties and home insurance work together, check out our home warranty meets home insurance video.

If you have questions, you can always address them with the salesperson or company representative. Like any other contract, it’s important to take the time to read the fine print in a home warranty before you enter into an agreement. Once you do, you will have added protection and unbeatable value as a reward.

The information in this article is intended to provide guidance on the proper maintenance and care of systems and appliances in the home. Not all of the topics mentioned are covered by our home warranty or maintenance plans. Please review your home warranty contract carefully to understand your coverage.