Home Energy and Efficiency

Home Warranties: What, Why and How

November 07, 2022
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Ana Anderson

A home warranty provides distinct coverage and another layer of protection for the systems that run your home. Separate from your homeowners insurance, home warranties cover select appliances and systems that need repairing or replacing due to everyday wear and tear. Homeowners insurance, on the other hand, covers both your home and belongings should the unexpected happen, like a fire or theft.

If you’re selling a home, a home warranty policy can cover items that could potentially break while the home is listed or under contract, but before a buyer takes possession. When you purchase a home, a home warranty policy can add a layer of protection and provide peace of mind for appliances that can be expensive to repair or replace. While a home warranty policy won't cover pre-existing wear and tear or cosmetic issues, it can be a real benefit when something unexpected happens.

Ready to learn more and see if a home warranty policy is right for you? Here’s how to get started:

1. Take inventory of your home’s systems. What appliances and systems are in your home that could potentially fail? What is the cost of repairing and replacing each of those items? Make a list and investigate the out-of-pocket cost of repair and replacement.

2. Determine your coverage needs. Does your home have older appliances that soon require repairs? Do you still have active manufacturer warranties to cover repairs? What's the condition of your major systems like the furnace, air conditioner, and water heater?

3. Contact at least three reputable home warranty companies for quotes and coverages. Ask around and get recommendations for companies before seeking quotes. If you’re buying or selling a home your realtor can be a helpful resource; they often partner with home warranty companies to provide coverage to buyers and sellers.

4. Read the fine print. Take your time and read carefully to determine if a particular home warranty is worth it for you. You know your needs (from steps 1 and 2!), make sure you understand what’s being offered in the policy and that it is a good match for your circumstances.