A home warranty is a service contract that helps pay to repair or replace covered systems and appliances when they break down from normal wear. Whether one makes sense depends on the age of the home and your budget.
What it usually covers
Plans commonly cover major systems such as heating, cooling, plumbing and electrical, plus appliances like the water heater, dishwasher and range. Coverage, limits and exclusions vary by company and plan.
What it doesn’t cover
Home warranties are not homeowner’s insurance. They don’t cover damage from storms, fire or accidents, and most exclude pre-existing problems and items that weren’t maintained.
For buyers
A warranty can soften the cost of a surprise repair in your first year, especially in an older home. You can ask the seller to pay for one as part of your offer.
For sellers
Offering a warranty can reassure buyers, and some plans cover the home while it is listed.
Read the contract
Before you buy, read the service fee per claim, coverage caps, exclusions and how contractors are assigned.
This is general information, not legal advice. Contract forms and rules change, so ask your broker or a real estate attorney about your situation.