What Is A Home Warranty?
A home warranty is a service arrangement that takes care of maintenance, repair, and replacement of broken-down important appliances and system components e.g. plumbing problems electrical wiring in a housing unit.
It serves to help homeowners avoid high repair costs and handle routine faults in electrical appliances, fixtures, and fittings.
It acts as a safety net against expensive, unforeseen faults that might arise after the sale of properties.
A home warranty is a contractual agreement between a homeowner and a home warranty company that handles discounted repair and replacement services on domestic components, e.g. furnace, heating, ventilation and air conditioning (HVAC), plumbing, and electrical systems.
Major home appliances, e.g. washers and dryers, refrigerators, and swimming pools may also be covered.
It is quite different from a homeowner’s insurance which covers major risks like fire, property crime, flooding, and so on.
Home warranty companies partner with verified service providers such that in the event of a breakdown, the company assigns one of its service providers to have the problem looked into after being alerted by the homeowner.
The service provider decides if the cost for repairs or replacement is covered by the warranty. They go-ahead to complete the job, if so.
The homeowner is then required to pay a service charge afterward.
The cost of securing a plan varies depending on the type of property which could be single-family detached, a condominium, townhouse, duplex, and the homeowner’s intended subscription plan (basic or extended)
Separate structures e.g annexes are not covered by the basic policy but can be secured at an additional cost.
The square footage of the home(if under 5,000 square feet) is also not a factor in the pricing.
A huge concern in the warranty arrangement is the ‘improper maintenance clause’, where home warranty companies and warranty holders disagree on what qualifies as improper maintenance by the current and previous homeowners.
Home Warranty Example
John owns a house and has a home warranty with Liberty Home Guard. He pays $700 per year for this. Johns’ hot water heater is a year old and has broken down. The cost of the repair of the heater is paid for by Liberty Home Guard, as this item is covered.« Back to Glossary Index