Home warranties can provide peace of mind to homeowners by covering unexpected repair and replacement costs for major appliances and home systems. However, misunderstandings about how home warranties work often lead to frustration or missed opportunities. Let’s take a deeper dive into 10 common misconceptions about home warranties and the truth behind them to help you make informed decisions.
1. Misconception: A Home Warranty Covers Everything in Your Home
Truth:
While home warranties provide extensive coverage for major home systems and appliances, they don’t cover everything. Items like roofs, windows, and structural components are typically excluded, as are aesthetic features such as paint or flooring. Even within covered categories, there may be limits—some plans, for example, might cover your refrigerator but exclude secondary appliances like wine coolers. To avoid surprises, thoroughly review the list of covered items in your warranty contract and consider supplemental coverage for items not included.
2. Misconception: Home Warranties Are the Same as Home Insurance
Truth:
Home warranties and home insurance serve entirely different purposes. Home insurance is designed to protect you financially from catastrophic events like fires, floods, or theft that cause damage to your home or personal belongings. A home warranty, on the other hand, covers the repair or replacement of systems and appliances that fail due to normal wear and tear. For complete peace of mind, homeowners should consider having both.
3. Misconception: Home Warranties Are Only for New Homes
Truth:
Home warranties are beneficial for all types of homes—whether newly built, decades old, or anything in between. For older homes, warranties can be especially valuable as appliances and systems may be nearing the end of their usable life. Even if you purchase a new home with brand-new systems, a home warranty can extend the manufacturer’s coverage, ensuring long-term protection.
4. Misconception: Home Warranties Cover Pre-Existing Conditions
Truth:
Pre-existing issues that were present before your home warranty coverage began are generally excluded. For example, if an appliance was already broken or a system showed signs of disrepair before you purchased the warranty, the provider is unlikely to cover it. Many warranty companies require a home inspection or a waiting period before coverage kicks in to ensure that claims are for genuine wear and tear rather than pre-existing problems.
5. Misconception: All Repairs Are Fully Covered with No Cost to You
Truth:
While a home warranty can save you thousands of dollars on repairs, it’s not entirely free of out-of-pocket costs. Most providers charge a service call fee, which typically ranges from $50 to $150 per incident. Additionally, some policies have caps on the amount they’ll pay for specific repairs, leaving you responsible for any excess. Understanding these costs upfront can help you budget effectively.
6. Misconception: You Can Choose Any Repair Technician
Truth:
Most home warranty providers have a network of pre-approved contractors and technicians they work with, which ensures consistent service and pricing. While this can save you time searching for a professional, it means you might not have the flexibility to choose your own contractor. If you have a preferred technician, you’ll need to check if your warranty provider allows out-of-network repairs and whether additional steps are required for reimbursement.
7. Misconception: Claims Are Always Approved
Truth:
Claims can be denied for several reasons, including lack of proper maintenance, misuse of the covered item, or if the item falls outside the terms of the agreement. For example, failing to clean your HVAC filters regularly or overloading your washing machine could void your claim. To avoid this, familiarize yourself with the maintenance requirements outlined in your policy and keep records of routine upkeep.
8. Misconception: Home Warranties Are Too Expensive to Be Worth It
Truth:
Home warranties typically cost between $300 and $800 annually, depending on the coverage and provider. While this may seem like a significant expense upfront, it pales in comparison to the cost of repairing or replacing major items like a furnace, air conditioner, or water heater, which can easily run into the thousands. For homeowners who face frequent repairs, a home warranty can provide substantial savings over time.
9. Misconception: You Don’t Need a Home Warranty if You’re Handy
Truth:
While it’s great to have DIY skills, some repairs require professional expertise, licenses, or specialized equipment. For example, repairing an electrical panel or servicing an HVAC system often requires a certified technician to ensure safety and compliance with local codes. A home warranty can cover these professional repairs, saving you both time and money while giving you peace of mind.
10. Misconception: Home Warranties Are All the Same
Truth:
Not all home warranties are created equal. Coverage varies widely between providers, and policies can differ in terms of limits, exclusions, and service quality. For instance, some plans might include pool and spa coverage, while others do not. Some companies are known for quick, hassle-free claims processes, while others have a reputation for delays. Before purchasing a plan, research providers, read reviews, and compare policies to find the best fit for your needs.
How to Avoid Falling for Misconceptions
- Read the Fine Print: Thoroughly review your home warranty contract to understand coverage, exclusions, and limitations.
- Ask Questions: Don’t hesitate to clarify terms with the provider before committing to a policy.
- Perform Routine Maintenance: Regularly servicing your appliances and systems not only keeps them in good condition but also ensures your claims are more likely to be approved.
- Choose Reputable Providers: Look for companies with strong customer reviews and transparent policies.
Final Thoughts
Home warranties are a powerful tool for managing home repair costs, but only if you understand what they can—and cannot—do. By debunking these common misconceptions, you’ll be better equipped to make informed decisions, avoid unnecessary frustration, and get the most value from your warranty. Whether you’re buying a home or protecting the one you already own, a home warranty can be a valuable addition to your financial planning.