Discover what home warranties cover, how they differ from homeowners insurance, and why they matter. A must-read for buyers navigating their first property purchase.

What Buyers Should Know About Home Warranties

Buying a home is one of the biggest investments most people will ever make. From inspections to closing costs, the process can be overwhelming—especially for first-time buyers. One term that often comes up during home purchases is “home warranty.” But what exactly is it, and do you really need one? Here’s what every buyer should know about home warranties before signing on the dotted line.

What Is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of major systems and appliances in a home due to normal wear and tear. Unlike homeowners insurance, which protects against damage from unforeseen events like fire or theft, a home warranty focuses on the breakdown of everyday items like:

• HVAC systems

• Plumbing and electrical systems

• Water heaters

• Kitchen appliances (refrigerators, ovens, dishwashers)

• Washers and dryers
  

Why Buyers Should Consider a Home Warranty

1. Peace of Mind After Closing
   Moving into a new home can come with unexpected surprises. A home warranty gives buyers confidence that if a major system fails shortly after purchase, they won’t be stuck with a huge repair bill.

2. Budget Protection
   New homeowners often face tight budgets. A warranty can provide a financial cushion, covering service calls and repairs for just a small service fee.

3. Limited Knowledge of Home History
   Even with a thorough inspection, buyers can’t always predict when appliances or systems will give out. A home warranty bridges the gap between what you know and what might unexpectedly break down.

4. Negotiation Tool During Purchase
   Buyers can sometimes negotiate for the seller to pay for a one-year home warranty as part of the deal, adding a layer of protection without added cost upfront.
   

What Home Warranties Typically Don’t Cover

While home warranties are helpful, they don’t cover everything. Exclusions usually include:

• Pre-existing conditions

• Cosmetic damage

• Improper installation or maintenance

• Outdoor items (sprinkler systems, pools—unless specifically added)
  

Always read the fine print to understand coverage limitations, caps, and service fees.

How Much Does a Home Warranty Cost?

On average, a basic home warranty plan costs between $300 and $600 per year, with service fees ranging from $75 to $125 per call. Optional coverage for items like septic tanks, spas, or second refrigerators may come with added costs.

How to Choose a Home Warranty Company

When selecting a home warranty provider, consider these tips:

• Read reviews and compare ratings. Look for companies with good customer service and transparent contracts.

• Check coverage limits and exclusions. Some companies cap repair costs at a few hundred dollars.

• Review the claim process. A quick and easy claims process makes a big difference when your heater breaks down in winter.

• Ask your real estate agent. Experienced agents often have trusted providers they can recommend.
  

A home warranty isn’t mandatory—but for many buyers, especially first-timers, it can be a smart investment that offers peace of mind and financial protection. If you’re in the process of buying a home or just moved in, take time to explore your options, read the fine print, and make a choice that fits your budget and lifestyle.

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