What Is A Home Warranty

Let’s be honest, the home buying process can be completely overwhelming. There are so many aspects that go into it, and even more paperwork that needs to be done. Who wants to add one more thing to explore or another thing to sign? While wanting to be “done” can be a strong desire, be sure to make room in your process for one last important thing - a home warranty.

What Is A Home Warranty?

Quite simply, it’s extra insurance that you can get for some of the key systems and appliances in your new home. Think oven, dishwasher and electrical system. A home warranty is a one year contract (though you can re-up every year,) that provides coverage for normal wear and tear breakdowns of items and systems located within the foundation of the home.

What’s Covered?

As mentioned above, appliances and systems located within the home. Covered items generally include: plumbing system, plumbing stoppages, toilets, sump pump (permanently installed), bathroom whirlpool motor pump, recirculating hot water pump, water heater, heating and ductwork, electrical system, telephone system, central vacuum system, garage door opener, ceiling fans, attic and exhaust fans, smoke detectors, doorbells, dishwasher, range, oven, cook tops, built-in microwave, instant hot water dispenser and trash compactor (note: this list is from Fidelity National, reflecting their coverage).

Some items need to be secured as “optional coverage” at an additional rate such as fridges, pools and spas, roof leaks and others.

Home Warranty vs. Homeowners’ Insurance

You have homeowners’ insurance, so why would you need a home warranty? Great question and the simple answer is, they cover different things. Homeowners’ insurance won’t repair or replace your dishwasher if it breaks down.  A home warranty repairs and replaces items and systems due to everyday use. Homeowners’ insurance covers damage due to hazards - fire, water, wind, etc.

Why Is This Related to Closing?

You’ve just bought this amazing new home, the biggest investment you will likely ever make in your life. But honestly, you don’t really know how well everything works. Odds are that if something is going to go wrong or break, it will happen within that first year of ownership.

When you have a home warranty, it gives you that extra security that if (or when,) something breaks down, you won’t have to be out thousands of dollars to remedy the problem. So when you’ve just put down a large amount of your savings, it’s helpful to know you’re less vulnerable to incurring any new, large expenses.

Overall, whether or not to buy a home warranty is a case by case decision. Certainly if you’re going to knock down the home and rebuild, you won’t need one. But before you complete your closing, you should give it serious consideration and determine if it’s the right product for your unique situation.


IMPORTANT NOTE: I have not and will not verify or investigate the information supplied by third parties.