What is a home warranty?

A home warranty is a service contract—sometimes called a home warranty policy—that helps pay for the repair or replacement of major home systems and appliances. Things like your HVAC, plumbing, or water heater. But to be covered, they must break down due to normal wear and tear.

It’s important to know that a home warranty is different than homeowners insurance, which helps protect your home and belongings from fire, wind, theft, or other covered events.

How does a home warranty work?

When it comes to home warranty protection, here are the steps you need to take to get the proper coverage:

1. Pick a plan: Choose coverage for the systems and appliances you want protected.
2. Something breaks: A covered system or appliance stops working during normal use.
3. File a claim: Request service with the home warranty company2 and explain the issue.
4. Pay the service fee: Pay the set fee for the technician visit.
5. Get a technician: The company assigns a service pro to diagnose the problem.
6. Coverage decision: If it’s covered, the company approves repair or replacement based on your plan limits.
7. Repair or replace: The technician fixes the item or it’s replaced, and you pay any non-covered costs.

What does a home warranty cover?

A typical home warranty helps cover the cost to repair or replace certain home systems and appliances when they break down from normal wear and tear. Here’s what is included in a home warranty with many plans:

• Kitchen appliances: Dishwasher, refrigerator, oven, stove, built-in microwave, garbage disposal
• Laundry appliances: Washing machine, dryer
• Home systems: HVAC, electrical, plumbing
• Other covered items in some plans: Garage door openers, fans, and exhaust fans

Many plans also offer optional add-on coverage for an additional cost, such as extra appliances, spas, pools, roof leaks, and more.

What does a home warranty policy not cover?

Coverage depends on the contract, and many claims are denied when the issue falls outside the plan’s terms for home warranty coverage. Here’s what’s not covered by a home warranty:

• Pre-existing problems: Issues that started before the warranty began, even if you notice them later
• Improper installation or poor maintenance: Breakdowns caused by incorrect installation, lack of upkeep, or neglect
• Cosmetic damage: Wear that does not affect how the item works, like dents, scratches, or discoloration
• Non-covered parts or conditions: Items or components not listed as covered in your contract
• Code upgrades and modifications: Costs to bring systems up to current building codes, or to modify for access
• Misuse or accidental damage: Damage from misuse, abuse, or accidents rather than normal wear and tear

Are there different types of home warranties?

Yes—and most companies offer several home warranty plans that vary based on what they cover. In general, this is how plans are grouped:

• Systems coverage: major home mechanical systems (heating/air conditioning, electrical, and plumbing)
• Appliances coverage: everyday household appliances (kitchen and laundry appliances)
• Combination plan: includes both for broader protection

The right option usually depends on whether you’re more concerned about big-ticket system breakdowns (like HVAC) or frequent-use appliances (like a refrigerator or washer/dryer). Many providers also offer optional add-ons, or upgrades, for items that aren’t always included in standard coverage. These include pools/spas, well pumps, septic systems, or extra refrigeration units—so you can tailor coverage to your home.

Pros and cons of getting a home warranty

If you’re asking “should I get a home warranty”, it depends on your budget, your home’s age, and how comfortable you are paying for an unexpected repair. A home warranty can help make certain repair costs more predictable by charging a monthly or annual fee plus a service fee when you request help. This can be appealing if you have older systems or appliances, or if you prefer the convenience of contacting a warranty company to coordinate a service provider.

Let’s weigh out the pros and cons of home warranty coverage:

Pros of home warranty:

• potential savings on covered repairs or replacements
• fewer surprise expenses
• simplified scheduling through the warranty provider’s contractor network

Cons of home warranty:

• limits on what’s covered
• exclusions or coverage caps
• required service fees
• possibility that you may need approvals or follow specific processes before work is completed.

Coverage varies by plan and provider, so compare fees to the repair costs you’re most concerned about.

Review your home inspection. Check the age and condition of your HVAC, water heater, and major appliances. Read the contract for exclusions, waiting periods, and coverage limits. If you can self-fund repairs or have newer equipment, a home warranty may be less worthwhile; if a big repair would strain your budget, it may provide peace of mind.

This information represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Exclusions may apply to policies, endorsements, or riders. Coverage may vary by state and may be subject to change. Some products are not available in every state. Please read your policy and contact your agent for assistance.

Home warranties are service contracts offered by home warranty companies and are not insurance policies. American Family Insurance does not provide home warranty service contracts.

This article is for informational purposes only and includes information widely available through different sources. This article does not afford, offer, or guarantee any coverage.