Real Estate News & Market Insights:
- Home warranty covers appliances and systems; homeowners insurance protects the home's structure and losses from unexpected events.
- Most plans cover HVAC, plumbing, water heaters, electrical systems, and major appliances, depending on chosen coverage level.
- Costs vary by plan; basic monthly fees are modest, while comprehensive coverage can exceed $1,200 annually, per Consumer Affairs.
- Expect a per-visit service fee (typically $50 to $150); bundle repairs to minimize multiple contractor charges.
- Sellers often buy a home warranty to reassure buyers and cover pre-closing repairs; providers may assign specialty contractors.
1. A home warranty isn’t the same as homeowners insurance.
It’s easy to confuse homeowners insurance and home warranties because they both cover home repair costs, but the coverage they provide is vastly different.
What does homeowners insurance cover?
A homeowners insurance policy, which protects the value of your home, pays for losses or damages arising from unexpected events, such as fire, flood, theft, or storm.
What does a home warranty cover?
A home warranty, which covers the appliances and the maintenance systems in your home, pays a portion of the cost to repair or replace such items when they break down. Depending on the level of coverage, a warranty may cover your HVAC (heating, ventilation, and air conditioning) systems, plumbing, water heater, electrical, and major appliances.
How much does a home warranty cost?
According to Consumer Affairs, home warranties are 12-month contracts that typically cost between $30 to $90 a month, while the average cost of an annual home warranty is $350 to $900 per year, depending on the provider and level of coverage.
For example, the most comprehensive home warranty coverage can cost upward of $1,200 to $1,400 yearly. The cost of your home warranty plan might be reduced by senior or military discounts.
How much will you pay for repairs with a home warranty?
Most home warranties charge a service fee, or deductible, of approximately $50 to $150 each time you call a contractor to come out to repair or replace items. This fee is nominal when you compare it to the cost of hiring an experienced contractor, plumber, or electrician yourself without the home warranty discount.
Since the service fee from the contractor-of-choice is usually charged per visit, it helps to create a list of all issues that need attention so that you can limit your service fees. Keep in mind that your home warranty provider may send a contractor who specializes in your primary problem. So you may be able to have your dishwasher and your leaky faucet repaired in the same visit, but not a faulty electrical outlet.
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