A home warranty is a service contract that you pay a monthly fee for that allows you to pay a set amount to repair major appliances and household systems. You pay a service call fee and a discounted amount for the repairs or replacement. Exactly what’s covered depends on your contract, but typically home warranties cover HVAC and electrical systems and water heaters. Some also include refrigerators, washers and dryers and you can add on coverage for septic systems, pools and hot tub and more.
A home warranty is a separate service contract. It is not home insurance but rather supplements it. If your home and appliances are relatively new, it’s not worth it to pay for a home warranty. The systems and appliances are likely covered by manufacturer warranties if they do fail, which is unlikely. However, if your home and appliances are old, it may be worthwhile in some cases. While you do pay a discounted rate and don’t have to find qualified repair businesses, most contracts don’t cover repairs needed due to normal wear and tear or improper maintenance. It may be likely that your definition of proper maintenance differs from the home warranty provider’s. That means in many cases you have to prove that you’ve done proper maintenance to get the home warranty company to do the work.