Every Minnesota purchase agreement includes a choice of including a Home Warranty as part of the agreement. But what exactly is a home warranty? How is it different from homeowners insurance? How is it different from repair plans such as Home Service Plus popular in the Twin Cities area?
What is a home warranty?
A home warranty is a one-year service agreement (which can be extended) that helps with the repair/replacement cost of covered items, typically heating and air conditioning systems, water heaters, appliances, some plumbing and electrical systems.
When something breaks down, you call the warranty company and they contact a licensed, independent contractor to check it out. You pay for the service call (usually $75-$125 depending on your plan) and the warranty pays the cost of the repair, or the cost of replacement if it can’t be fixed. Of course the extent of the coverage depends on your plan.
How is a home warranty different from homeowner’s insurance?
A warranty covers home systems and appliances when they break down due to normal wear and tear. Homeowner’s insurance typically covers damage that happens due to events like fires, theft or natural disasters.
How is a home warranty different from repair plans like Home Service Plus?
With a warranty you pay a pre-set fee for the service call, then repair/replacement costs are covered by your warranty. With a repair plan, you choose and pay for different kinds of service and items to be included: basic repair, total repair, maintenance, replacement, etc. Your service call fee is typically covered by your plan, and other costs are covered totally or partially or not at all depending on your plan. You can choose which items are covered at what level, and obviously the cost goes up with the coverage. They may also offer 24/7 service coverage. Review your plan and needs accordingly.
I have worked with clients who have had home warranties and and loved them… with others who have service plans and love them… and with others who want nothing to do with either one.
It can make sense to have some kind of coverage, especially if you are on a budget… do your homework and figure out what makes the most sense for you.
If you are buying, you can ask the seller to pay for a home warranty for a year which can at least give you some coverage while you figure it all out and decide what makes most sense for you and your situation after that.