January 4, 2021

Who Pays for a Home Warranty Plan and How Does One Work?

Peri Elgrot

Home Warranty Editor

There are homeowners that swear by them while some hate them. After closing on a house, the last thing a home buyer would want is a malfunction in the new home, but it can happen all the same. That’s why it’s a good idea to get a home protection plan or warranty so you don’t need to worry about it. It will cover the costs if something goes wrong. It’s an especially good idea to get a home warranty if you’re a first-time homebuyer without any experience in maintaining a home.

Who Pays for a Home Warranty?

Whether the seller pays for the home protection plan or the buyer pays will depend on your local customs. It’s perfectly normal for a seller to pay for the coverage in places because it’s a seller benefit. However, the buyer won’t be calling the seller after closing if something happens to break.

How Much Does it Cost?

As of 2019, these plans aren’t too expensive. They can range from $350 to $600 a year. However, the price can also depend on your coverage. Home warranty companies run specials at times in which they’ll either discount policy prices or offer additional coverage for the exact same price.

Generally, policies are paid for a year in advance. They can be renewed by the homeowner once they expire.

How Do They Work?

There are plans which provide specific types of coverage, but most tend to operate in a similar manner and contain common verbiage.
The homeowner calls the home warranty company if a system or appliance breaks or stops working.
The home warranty company calls a provider that is had a business arrangement with.
The provider calls the homeowner to make an appointment.
The provider fixes the problem. The warranty company will pay to replace and install the appliance if it can’t be fixed, depending on the contract coverage.
The homeowner will pay a small trade service fee for the visit which can range from $60 to $100. You can negotiate the amount when you sign up for the plan.

Types of Coverage

You want to ask exactly what is covered under your plan since all plans are different from one another. Ask your real estate agent if upgrades are available, and pay attention to whether the warranty company will pay for repairs to make certain systems or appliances compliant with the new regulations.

 General Coverage in a Home Warranty

The issues that are typically covered by insurance include:

Air conditioning

Kitchen appliances

Washers and dryers

Doorbells

Furnace/heating

Water heater

Ductwork to code

Garbage disposals

Inside plumbing stoppages

Ceiling fans

Electrical systems

Range and oven

The coverage for a home warranty plan can vary from policy to policy as well as from state to state. So, before committing to anything, ask to see a sample copy of a policy. Some homeowners swear by home warranty plans while others absolutely hate them.

What Might Not Be Covered

Not everything that goes wrong in a house will be covered by your plan. Home warranties might not cover:

Outdoor items like sprinklers

Faucet repairs – this can vary

Refrigerators, washers, dryers, or garage door openers

Spa or pools unless specifically requested

Permit fees

Haul-aways

Items that were broken before closing on the house

Exclusions listed in the policy

Make sure to double-check your specific policy to see what is and isn’t covered

What Can Cause Denial Of Payment?

At times, it can seem like the company is purposely looking for a way not to cover your claim, and at times, that can be accurate. It might happen for a few reasons:

Improper maintenance.

A pre-existing condition which was disclosed in a home inspection.

Code violations.

Unusual wear and tear.

Improper installation.

What If You Disagree With the Outcome?

A service provider can deny a claim. When that happens, call your real estate agent and complain. Your agent can figure out a solution if they have a good working relationship with the representative from the home warranty company.