How Does a Home Warranty Work in 2021?

Last Updated: April 15, 2024

Michael Rosenberg

Michael Rosenberg

Specializes in translating complex information into readable, engaging content. Michael@top10us.com

A home warranty is a prerequisite for a peaceful and financially stable life. With the growing challenges of modern life, the way home warranty works have also evolved giving you continuous peace of mind. Before jumping into how a home warranty works in 2021, let’s have a look at what actually a home warranty is and what it contains. 

What is a home warranty?

A home warranty is a consumer service that is purchased to lower the risk of unwanted expenses due to the failure of home appliances and systems. Home warranty can’t be considered as home insurance, both are different in working as home warranty compensates you for malfunctioning of home appliances or systems due to routine wear and tear and home insurance work for damage due to natural hazards like a windstorm, hailing, or fire and theft.  

A home warranty is a suitable and complete plan for the protection of your house, you can purchase a home warranty at any time after purchasing your house. After subscribing to a home warranty, if any home appliance is faced with an issue, you can file an online claim to the service providers to fix the issue. Your home warranty providers will entertain you at their priority by sending a contractor to diagnose the problem and then to fix it either by repairing or replacing it. 

What does a home warranty cover?

A home warranty covers the items that are particularly mentioned in the contract, some cover the home appliances, while others cover home systems like heating, cooling, and water system. There are some comprehensive companies available in the market, that can cover both home appliances and systems and you can add other small items like a well pump, spa, or pool. 

When you purchase a home warranty, then it’s wise to have a look at all items because some items would be newly purchased and would fall in the manufacturer’s warranty, so there is no need to cover them in the home warranty. Like maybe your dishwasher and clothes washer are in manufacturer warranty but your refrigerator is not, so carefully looking into items can save you more money. 

Systems covered by home warranty

Systems that are covered by home warranty policies are mainly these:

  • Heating
  • Water heater
  • Electrical
  • Plumbing
  • Ductwork

Appliances covered by home warranty

  • Garbage disposal
  • Dishwasher
  • Air conditioning system
  • Cloth washer and dryer
  • Oven and cooking range
  • Pool and spa equipment

How long would your home warranty last?

Home warranty providers offer different criteria of the time limit, some warranties last for one year while some warranty providers offer month-to-month coverage. It is good if a warranty lasts for one year because items that are working perfectly in one year may not work properly in the next year. So, after one year you can review the whole coverage to add new things and to remove the things that are working perfectly now. For example, it may happen that last year your dishwasher was out of coverage because it fell in the manufacturer’s warranty but next year it might be on the last legs, so you can add in new year’s coverage.  In 2021, many companies have come into the market that gives better coverage with optimum coverage period. 

What should be looked for in a home warranty company?

In 2021, many new companies have come into the market with more attractive coverage and packages, so competition has surged. When you have to buy a home warranty, first have a look at your home appliances and systems and figure out the big-ticket items that are costly to replace and repair. Consider all possible occurrences about items like age or condition of items, date of their last service, their pre-existing conditions due to which breakdown may occur, and the expense that you have to bear to repair them by yourself. It is important to know the cost of each repair and whether you can afford it or not. If it is affordable, then it should not be included in coverage because they won’t always compensate you with the whole repair cost, they set charge limits like $1500 for refrigerator repairing.

It is very tricky to find pre-existing conditions because if an appliance has come with your new house, then you would not know its service history. So to avoid all the mess, it is better to purchase the home warranty that comes with a home inspection. They will provide you every detail of pre-existing conditions and the issues that could be faced and would not be included in the coverage. 

If you are choosy about service providers and who repairs your home equipment or appliances, look into a home warranty that allows you to call the contractors of your choice.

It would be better to go with the home warranty providers whose claim offices are in your area and have a call center available 24/7 to save yourself from any hassle. 

How much do home warranties cost? 

In 2021, according to a report, the average cost of one year home warranty is $550. When you are up to purchasing a home warranty, first read the manual to understand service visit charges, repair charge limits, and specific exclusions of the contract. 

Don’t go with just the price tag, read all terms and conditions because a company may offer you a policy for just $15 but it will not cover anything.

The cost of companies that offer the most comprehensive home warranty plans falls in the range of $510 to $675 with $30 to $125 for service fees. 

Apps that help you purchase a home warranty

It is 2021, the most advanced era, where many companies come with their apps to help you out with just a few taps. Companies like American Home Shield, Choice Home Warranty, Amazon Home Warranty, and Select Home Warranty come with the best overall plans with monthly costs of $29-$60 and a service fee ranging from $60 to $125. They have apps that are easy to use and give you a complete understanding of home warranty procedures, exclusions, and charges. 

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