Becoming a homeowner is a milestone insofar as a few thousand square feet of land accredited to your name alone is definitely an exhilarating experience. However, the thrill of being a homeowner must not distract you from the next important matter at hand– your backups.

Security deposits are essential to every walk of life. Similar to how you insure your car, home warranties for newly purchased products, home systems, and appliances, is necessary. A home warranty is a contract that provides you with the security of covering repair and replacement costs in the case in which any of your home systems or appliances get damaged. Homeowners, perhaps amidst the entire thrill, tend to confuse home warranty with home insurance or even muddle the two terms together. 

In this article, we will cover the top three things that must go on your fingertips regarding a home warranty and how it helps you save your cost. 

Home Warranty is not Home Insurance

Let us first clear the two pieces of jargon that might have confused a few homeowners here. Home insurance is a legal contract that obliges a mortgage lender to pay the basic cost for structural damage that occurred to your home. A home warranty, on the other hand, is another optional service contract that covers the expenses of wear-and-tear maintenance of the house, along with any repair or replacement of the appliances that you might want to carry out. 

Home warranties might sound like home insurance, but they are two completely separate policies. The purpose of adding this here is to urge homeowners not to neglect the home warranty option once they get the insurance. The two go hand-in-hand and form a foolproof package that will protect your home and save your future headaches in the case of damages to your home and home systems.

3 Things You Should Know

1. What comes under the cost of a home warranty?

It is imperative to be aware of what comes under this policy and what doesn’t. Mechanical systems of the house such as plumbing, heating, air conditioning, and electrical are covered under this service. However, it does not cover the costs that include misusage, external damage, or inadequate maintenance that could be categorized under “mishandling” post-purchase; in which cases could be completely denied.

Some appliances or products that you buy already have a company-granted warranty tagged with them; therefore, a home warranty won’t coverthose under its service. Consequently, it is only wise to read through the warranty contract carefully and speak to a consultant of the company regarding your options.

2. How does a home warranty work?

If you were of the opinion that you can call your repairman around the block and get your work done under the cost of the home warranty, stop right there. The home warranty contract is issued by the company and you cannot invite anyone to do the maintenance that is required; it has to be a contractor selected by the home warranty company. This is for the whole process to be made more efficient for you and the other individuals that are using the same home warranty company in your zip code.

The procedure goes something like this; you call the company that had issued the warranty contract, narrate the problem, and they will send a contractor. Once the contractor arrives, you will have to pay them their service fee for diagnosing the problem which is called a deductible and is usually much cheaper than the process of doing it alone.

If the problem is approved by the contractor to come under the cost of the home warranty, the rest of the damage will be free of cost.  

3. Reread the home warranty contract.

Well, you most certainly should, because unsurprisingly, the home warranty companies may have a clause or two somewhere along the lines that can save them from covering the damage later on. Homeowners who sign the contracts without skimming through can find themselves stuck to pay for a worn-out appliance or torn wires if they fail to produce relevant proof. 

That’s right; the company can give the issuer the right to deny any customer repairing costs if they are unable to provide evidence that a certain appliance or system was regularly maintained.  

It is better to be late than sorry, so feel free to invest time; read through the warranty contract before you approve it and speak to one of the companies’ advisors. This world is surely a place of betrayal.  

Home Warranty Saves the Cost Significantly

Despite all the hurdles that you have to endure after approving a home warranty policy, you cannot deny the savings that follow suit. This industry began back in the 1970s and has, since then, benefitted many homeowners in saving unnecessary expenses such that we urge you to include this option in your lives. 

Not always fixed, but home warranty plans allow a costing range of $350 to $550 per year. These plans are outlined by the companies once they evaluate the size and condition of a particular house, performed separately for each homeowner. As previously mentioned, the homeowners are expected to pay the service fee to the contractors – but this is a one-time payment. It costs around $60 on average, and is paid once; it allows you to claim the rest of the damages as long as the contract remains valid. 

Paying a few bucks and getting repairing costs of around a hundred bucks is certainly a win-win deal. Home warranty contracts are specifically beneficial to homeowners bearing expensive electronics and mechanical systems in their houses. 

The policy renews annually, and the renewal is far more cost worthy on an annual basis than covering the damage of appliances yourself all around the year. You can do a bit of cost-benefit analysis to clarify the picture that would show whether or not a yearly payment makes more sense than preparing for potential repair costs. 


Since a home warranty is an optional service, homeowners should study the condition of their appliances and the house they are buying in order to evaluate the cost-benefit plan. Also, considering a home warranty is even more important in a way that the items inside your new home are still under the manufacturer’s or the builder’s warranties.  

Always go for the wiser option using the protection “add-ons” if you have a sound monthly income, this is to save yourself and your home from coming under the weather likely in the future. 

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