5. Unauthorized Repairs or Reimbursement: Calling a repair company and having a problem fixed—without prior approval from your home warranty—is not a good idea if you are expecting to be reimbursed. You should notify the home warranty company of a repair issue first, so they can send out an authorized service provider. On rare occasions, a home warranty company may provide you with an authorization to have the service performed by a contractor of your own selection.

4. Pre-existing Conditions, Improperly Installed or Mismatched Equipment, and Poorly Maintained Systems: Be sure home systems and appliances are in good working order upon the start date of a warranty. Any malfunctions or problems that fall into the above categories typically are not covered. However, some providers are now offering upgrades that include coverage for these issues that are normally denied. Home warranty plans typically only cover repairs or malfunctions caused by normal wear and tear.

3. Indirect, Special, or Consequential Damages: We recommend calling 911 if your home is on fire—not your home warranty company; they are the ones with the hose. This is another way of saying: home warranties do not cover damage from weather, accidents, acts of God, mold, fungus, structural changes, vandalism, pests and pet damage. So, if your water heater spills 50 gallons of water into your client’s house, the home warranty owes your client a new water heater, not a new carpet. Oh yeah, they also don’t typically cover damage caused by attempted repairs—so keep your husband away!

2. Items Outside the Perimeter of the Home: With the exception of your pool/spa and HVAC equipment, items outside the perimeter of your home are not typically covered by your home warranty plan. Some people are surprised to learn that the plumbing leak in the yard is not covered. But, it is a “home” warranty and not a “yard” warranty, and most home warranty contracts exclude these types of leaks from coverage.

1. Read the Contract: Do you read the back of your Valet ticket? We don’t either. But, we should. Unfortunately, you shouldn’t assume home warranty contracts are all the same. We encourage you to read and get an understanding of your home warranty contract, so you can use it more effectively. Yes, about 80% of the contracts of the various home warranty providers are similar, but that 20% difference can be substantial!

First, a home warranty is a “residential service contract”. It is a CONTRACT. Therefore, it is important to be aware of what the contract says before buying it. I would ask for a sample from the company, or download one directly from there website. Now, these things are not easy to read, but if you really want to know what you are getting into–there is no better way than actually reading the contract. And, some of the coverage might surprise you…better to be surprised BEFORE you buy it than AFTER you buy it…

Second, for each service request, there is a “trade call fee” due at the time of service–even if the repair is denied. Typically, these trade call fees range from $55 to $75 per call. You pay them based on the trade and the call….in other words, a plumbing call with 3 plumbing problems included at all the same time would be one trade call fee. But, a plumbing and an appliance call would be two different trades–therefore, two different trade call fees would be due.

Third, home warranty plans only cost about $350 to $400 per year and cover a bunch of different systems and appliances. So, don’t get your hopes up–not everything will be covered every time. I am convinced that a good home warranty plan from an honest/fair dealing home warranty company is a great way to manage your home repair budget. For example, even if they deny a claim, paying $60 for a diagnosis is a lot cheaper than paying retail rates (which can be over $100 easily). If your A/C breaks, the retail prices for A/C repairs and replacements are HUGE…a typical HVAC system costs approximately $6,000 to $8,000…so getting good coverage in place is important.

I hope the basics got you interested in learning more…check out our other articles for more information on home warranties…and check back in our site from time to time to see the latest rankings.

Coverage Plans Comparison

In order to get a good “apples-to-apples” comparison, you need to make sure your coverage between plans is comparable. In my opinion, all coverage should include Air Conditioning (hey, I grew up in the South), but be careful as some “Standard” plans offered do not include A/C!

Here are the items that are in most Standard Plans:

Air Conditioning System (typically 2 systems are included but additional can be purchased)
Heating System (same as above–2 systems included but more can be added)
Ductwork
Plumbing System (leaks, valves etc…faucets and showerheads are usually an extra cost)
Plumbing Stoppages (only guaranteed for 24 hours)
Water Heaters (not tankless…only the traditional…tankless can be an extra cost)
Toilet Bowls
Recirculating Pumps
Electrical System (breakers, outlets, switches but not usually the breaker panel)
Garbage Disposals (not damage caused by foreign materials ie forks!)
Dishwasher
Oven/Stove/Cooktop
Built-in Microwave (they have to be built in as indicated by the manufacturer–not made to look that way!)

Strangely, optional coverages not included in the Standard plans are things you and I may use everyday, so be careful to make sure you have the right optional coverage in place.

Here are some Optional Coverage items that are included at an extra cost:

Premium Upgrades (extends the Standard Plan to cover stuff like faucets, showerheads, some code violations, ceiling fans etc)
Refrigerators (usually they must be located in the kitchen–no old garage refrigerator clunkers!)
Washer/Dryers
Pool/Spa Equipment (only heating, filtration and pumping equipment)
Built-in Wine Coolers
Stand Alone Icemakers
Garage Door Openers
Well Pumps
Septic Systems
Pest/Rodent Control
Termite Treatment

So make sure you are comparing apples-to-apples and make sure you are getting the right coverage for your home. It is no fun to find out after it breaks that you did not buy that optional covered item.

I hope this was helpful for you!

What the home warranty typically covers:

The standard home warranty provides coverage for the following systems: air conditioning (especially in the South and West), heating, plumbing, electrical, water heater, dishwasher, stove/oven/cooktop, garbage disposal and built-in microwave. The average price for one year of coverage is $375 to $425 with a trade call fee of $60 to $100. The property owner can buy optional coverage for items such as refrigerator, washer/dryer, garage door opener, stand alone icemakers, wine coolers, pool, spa, square footage over 5,000 sq ft and so on.

Lastly, many home warranty providers offer “premium upgrades” which typically cost from $35 to $75 and extend the basic terms of your standard warranty to cover more potential repair costs. For example, if the basic coverage did not include faucets and showerheads, then with the premium upgrade, the basic coverage is extended to include faucets and showerheads. It is important to understand what is included in these types of upgrades. Typically, they are a good investment to make for the coverage provided.

In addition, home warranty coverage is limited to items that are in good working condition as of the start of the contract, are located within the foundation of the house and are reported to the provider before the contract expires.

And coverage only applies to repairs caused by normal wear and tear.

What the home warranty typically does not cover:

I know what you are thinking—here comes the catch! Well, yes, these providers are selling a $375 product, and, in order to do that economically, they require coverage to be limited in particular ways. In case you are starting to drift off and think about your grocery list or pedicure appointment, this is the important part!

Home warranty coverage is typically limited in the following ways. First, systems must be maintained properly. For example, you’re A/C system—which we use about 340 days per year in the South—needs a once a year maintenance visit. (For some reason, we change our oil every 3,000 miles, but we expect our air conditioner to work for 15 years without touching it…) So, don’t ignore that A/C—keep it well maintained.

Second, coverage does not apply to the brand name, just the ratings, size and efficiency of the system. This means your “Trane” or “Carrier” A/C will be replaced with, or covered up to the cost of, the same size unit but not the same brand, although you can pay the difference if you prefer a more expensive brand. This is also true with kitchen appliances—don’t expect your Sub Zero to get replaced with a Sub Zero! (What did you expect for a $65 option?)

Third, home warranties do not cover secondary or consequential damages. So, if your water heater fails, and sends 50 gallons of water into your living room, the home warranty company would be required to repair the water heater but not the secondary damage to the house.

Fourth, coverage does not apply to systems that are already covered by a manufacturer’s warranty.

Finally, the typical home warranty does not provide coverage for code upgrades, permits, modifications, access/restoration costs and equipment disposal costs, although some of these items may be included in the warranty’s “premium upgrade”. In other words, you should expect to pay a significant amount for non-covered aspects of major home system repairs and replacements. Although some of these extra costs are included in the “premium upgrades” offered, the standard home warranty does not cover the costs to bring your mechanical systems up to code, to dispose of your old equipment, to pay for required permits or to modify the new equipment to work with the existing equipment. In addition, costs for access and restoration are not covered by the standard home warranty policy.

I hope this brief overview has been helpful!