10 Common Myths About Home Warranties Explained

Home warranties can be polarizing, especially if you’re not sure what you’re dealing with. These contentions and confusions feed a lot of common home warranty myths. In this article, we’ll set them straight, so you can purchase a plan that aligns with your needs. 

How Home Warranties Differ from Home Insurance

Home warranties and home insurance provide similar peace of mind, but their coverage terms and applications are very different. Home insurance applies to structural damage and issues caused by a perilous event, such as vandalism, certain weather events, or fire. Homeowners insurance can apply to personal belongings damaged in a qualifying event, but these policies often come with a high deductible of at least $500. 

Home warranties, on the other hand, cover internal systems and appliances that you use in your everyday life. When a covered item breaks due to daily wear and tear, your home warranty provider sends out a licensed technician to assess and diagnose the issue. If they determine it’s a covered malfunction, the home warranty will pay up to your coverage limit to repair or replace it. Compared to a home insurance policy, home warranties have a much lower out-of-pocket fee to file a claim, typically between $60 and $125. 

For the best budget protection and peace of mind, it can be helpful to have a home warranty and home insurance policy.

What Do Home Warranties Typically Cover?

Home warranties cover systems and appliances when they break due to routine use. While every home warranty plan is different, many providers offer appliance-exclusive, systems-exclusive, and combination plans. 

In general, appliance plans tend to cover the following items:

• Clothes washer/dryer
• Kitchen refrigerator
• Oven/stove/range
• Garbage disposal
• Dishwasher
• Built-in microwave
• Garage door opener

Systems plans apply to the following items:

• Electrical
• Plumbing
• Air conditioning
• Heating
• Ductwork
• Water heaters

When you select a combination plan, you may end up paying more per month, but your coverage may be further reaching than a narrowly focused plan. If your coverage needs exceed the typical systems and appliances, you often have the option to select add-ons.

However, the covered items aren’t the only details you need to keep in mind. When you file a claim, you’ll have to pay a service call fee to request service, so it’s important to familiarize with this figure and ensure it’s in your budget. Even more, you’ll want to make sure you know the coverage limits and exclusions outlined in your policy. For example, if your home warranty only covers $500 toward your clothes washer, but it costs $600 to repair or replace, you’ll have to pay the $100 difference. 

Debunking the Most Common Myths

1. Home Warranties Are Redundant If I Have Home Insurance

As mentioned earlier, home warranties and home insurance policies have a different scope of coverage. You’ll need home insurance for perilous events and Acts of God, but it won’t do much good if your dishwasher stops working on a regular day. Both types of coverage can provide peace of mind in unexpected circumstances, but home warranties are much more effective at reducing costs for wear and tear repairs and replacements. 

2. Home Warranties Cost More Than The Value They Provide

Home warranties aren’t a negligible cost. Depending on the extent of your elected coverage, you can expect to pay between $300–$800 annually for home warranties. Now, imagine your garage door opener breaks the same week as you have a major plumbing issue. Can you afford to cover the costs to call out a technician and repair the items out-of-pocket without making big sacrifices elsewhere?

If not, a home warranty can provide a lot of value for a comparatively lower cost than tackling everything on your own. 

3. New Homes Don’t Need Home Warranties

While it’s true that home warranties tend to exclude products otherwise covered by a manufacturers’ or builder’s warranty, these plans are short-lived. You may be able to pursue recourse within a year or two, that time can pass quickly. Once the warranty expires, you’re on your own. Home warranties can help diagnose and defray the costs of home repairs when they occur after the built-in warranty period. 

4. You’re Restricted to In-Network Contractors

Many home warranty companies pride themselves on maintaining a huge network of reliable contractors and it can be a major time-saver if you don’t have an existing relationship with a local technician, but not all providers demand you work within their network. 

If you have a contractor you already trust, make sure you verify with them and any home warranty provider that they’re willing to work together. 

5. Home Warranties Will Always Deny Claims

Dissatisfied past customers will often scream their complaints from the rooftops, but it’s not always representative of the broader customer service experience. Reputable home warranty providers will have representatives to answer your questions and a clear sample agreement that allows you to familiarize yourself with the exact terms of your service. 

As long as you stay up to date on your premiums, maintain your items accordingly, and avoid filing claims for malfunctions that fall within the provider’s outlined limits of liability, you have a good chance of having your claims covered. That said, many providers impose a waiting period, which may reduce your coverage for the first 30 to 90 days.

6. Home Warranties Cover Everything

While some customers warn others that home warranties won’t cover anything, others overcorrect by assuming they cover more than they do. Home warranty plans are intentionally narrow, so it’s important that you fully understand the extent of your coverage. For example, a home warranty plan that covers an oven is unlikely to replace the glass window or racks, but it will cover the heating element. 

Take the time to carefully read the covered elements and exclusions for each item, so you know what to expect should you need to file a claim. The best home warranty providers will have user-friendly agreements that bold exclusions for easy reference. Most importantly, home warranties rarely cover pre-existing conditions. 

7. You Can Do It Yourself Faster Than Filing A Claim

If you’re naturally handy, you may be able to DIY some home repairs, but there’s always a chance that you make it worse, jeopardize future coverage options, or otherwise increase your costs. Many home warranty providers will respond same-day if you file a claim during regular business hours and you’ll often receive initial contact within 48 hours. Busy professionals and those with other priorities may not have the time to immediately focus on repairs or vet and hire outside help before a seasoned home warranty provider can make plans within its network.

8. Go With The Cheapest Quote

Home warranties aren’t created equally. Some providers promise a low rate but make up for it with a long list of exclusions, bad faith claims denials, or poor contractor availability. To find the best policy for your needs, we recommend requesting a quote from at least three providers, then comparing the covered items, exclusions, and other limitations. Cheaper at face value may end up more expensive in the long run, whereas more expensive upfront may save you substantially over the plan term.

9. Referrals From Realtors Are Better

You should trust your real estate agent if you’re working together, but a healthy dose of skepticism can be a good thing. Home warranty companies often build relationships with real estate agents to sell their products, but it may not be the most unbiased advice. In these circumstances, you’re more likely to receive a brochure or other promotional materials designed to make a sale. It’s your responsibility to seek out service agreements and ask questions to ensure you understand 

10. All Home Warranty Providers Are The Same

In this industry, reputation is everything. Home warranties may appear strikingly similar at first glance, but it’s important to compare price and value. You’ll also benefit from thoroughly investigating the company’s home warranty reviews and vetting current and past legal action. 

Start by looking up any company on the Better Business Bureau and reading through any alerts and recurring patterns of complaints to ensure you’re working with an above-board provider.

Protect Your Home by Understanding the Facts About Home Warranties

Put simply, home warranties are a tool to help reduce some of the costs of home repairs, but they are limited, so it’s important to understand the terms. We’ve laid out a few of the common considerations you need to keep in mind to make the most of your plan:

• Home warranties have waiting periods. Your home warranty should have a clear effective date, so you know when you are eligible for coverage. It’s typically 30 to 90 days after you purchase the plan. 
• Home warranties have coverage caps. Some home warranties have an all-in coverage cap while others break it down by specific item. Either way, it’s important to know exactly how far your coverage goes, so you can prepare. 
• You’ll need to pay a service call fee when you file a claim. Even if your claim is denied, you’ll need to pay the outlined fee to request service. This fee covers the initial costs to visit your home and assess the issue. 
• Pre-existing conditions are seldom included. Any issue that predates the start of your policy runs the risk of being excluded. Learn more about preexisting conditions.

If you’re unclear on any aspect of your potential policy, take the time to slow down, call a representative, and ask questions. This process can provide major insight into the company’s policies and how they implement them. Their answers aren’t the only important thing there though. Any impatience, sales talk, or contradictions can be a red flag that the company isn’t there to serve you.  

How to Choose the Right Home Warranty Provider

Choosing a home warranty provider is a thoughtful endeavor that requires careful research and comparison. Here are our tips for choosing the right home warranty provider for your needs:

• Determine your must-haves
• Request a sample contract
• Talk to customer service representatives
• Review BBB profile and other review sites for complaint patterns
• Ask neighbors, friends, and colleagues for referrals
• Compare quotes

When in doubt, go with your gut. At Liberty Home Guard, we center homeowners’ needs and make it a priority to deliver outstanding and predictable results that fall in line with our contract terms. For more information, request a LHG quote or call us today at (833) 543-7830.