Home warranties are a fabulous way to protect yourself from expensive repair costs! I recommend them for all of my buyers and make the home warranty a part of the purchase contract.
So, how do they work?
If an appliance or a mechanical system, for example a hot water heater or furnace, breaks down, you call the home warranty company. The home warranty company has already vetted service providers in your area and has a business arrangement with them. The service provider will call you to set up an appointment to repair the broken item.
The service provider will fix the malfunctioning appliance or system and you will pay a small service fee of $75 to $100. If the broken item cannot be repaired, depending upon your contract coverage, your home warranty company will replace it and will install the new system or appliance at no extra charge.
My hot water heater broke and the home warranty replaced it saving me over $1,000. Please note, the home warranty covered the replacement of the hot water heater, but not the extension of the pipes to fit it, so there were additional charges that I paid for, but I would have had to pay for them anyway without a home warranty and I would have had to pay for the new hot water heater.
General coverage includes: Furnace/heating systems, hot water heaters, air conditioning, ductwork, electrical systems, refrigerators, stoves, washers, dryers, even doorbells. Some policies will rekey the house after a new purchase.
What can cause denial of a claim? Improper maintenance, improper installation, unusual wear and tear, and code violations.
Please read your specific policy for details.