Do it Yourself

What Is A Home Warranty & Do You Need It?

Now let’s get in: A home warranty is a renewable home care plan that covers your home’s systems and appliances, including water heaters and HVAC systems in the event of a breakdown. Homeowners insurance policies typically cover disasters, so warranties are meant to help pay for things that break down through wear and tear and everyday use.

living room in newly constructed luxury home

How Does It Work?

A home service plan is optional, but it is often a good idea to purchase, according to Raj Midha, general manager and senior vice president of American Home Shield, a warranty company. This policy will usually cost about $50 to $75 a month. That low price can pay off in a huge way.

According to Midha: “Let’s say your HVAC system stops working. In that case, a qualified, independent service contractor will be assigned to assess the problem. If it’s determined that the system is no longer working because of age or wear and tear, and the breakdown is covered under the terms of your service contract, the repair professional will make the repair, or if necessary, replace the appliance or system component for just the cost of your service call.”

Midha’s company covers the costs according to which plan you’ve chosen. He says: “A one-time service call costs either $75, $100, or $125 based on the amount you choose in advance when you become a member, and American Home Shield pays the remaining amount for the repair or replacement based on the plan that you have selected.”

In terms of what it doesn’t cover, he shared that: “In general, a home warranty does not cover events like fire, smoke, theft, fallen trees, or damage caused by weather, which are covered by home insurance.”