What Does a Home Warranty Cover? Systems, Appliances and Add-Ons Explained

A home warranty is a service contract. It pays to fix or replace home systems and appliances that break from normal wear and age. But it only covers the items your plan lists, and only up to the contract's limits and rules.

What "covered" really means

An item appearing on a plan is only the first test. Three things have to line up before a repair is covered:

• The item is listed in your plan — a system, an appliance, or an add-on you paid for.
• It failed from normal use and aging, not from a cause the contract excludes.
• The repair or replacement falls inside the contract's limits and follow-up rules.

You may still pay even for a listed item. Providers usually cover the broken part, not the damage around it. A covered water heater may not include the water damage it caused. A covered refrigerator may leave out the food inside or a separate ice maker. A covered HVAC system may leave out refrigerant, ductwork, or a code upgrade a new part needs.

The three building blocks

Nearly every provider builds plans from the same pieces: systems, appliances and optional extras.

Systems plans

Systems coverage focuses on the parts of your home you can't easily see: heating, air conditioning, ductwork, plumbing lines, electrical wiring and panels, and usually the water heater. These are often the most expensive repairs a household faces.

Appliance plans

Appliance coverage typically includes the refrigerator, oven or range, cooktop, dishwasher, built-in microwave, garbage disposal, and clothes washer and dryer.

Combination plans

Combination plans bundle systems and appliances together. They cost more than either plan alone, but suit homeowners who want a single contract — and a single number to call — for most of the house.

Common add-ons

• Pool and spa equipment
• Septic systems and well pumps
• Sump pumps
• A second refrigerator or standalone freezer
• Limited roof leak repair

The fine print that matters

The fine print decides what is covered, not the sales page. Look for: coverage caps (the most a provider will pay per item and per year); exclusions (problems that started before coverage, missing upkeep, bad installation, and permits or code upgrades); and what happens when an item can't be fixed. Some providers replace it. Others pay only a set cash amount toward a new one. Our FAQ on coverage walks through each of these.

A quick read-before-you-buy checklist

The California Department of Insurance's home protection contract guide explains that covered items, exclusions and dollar limits must be read together. It also lists examples of systems and appliances that may be covered. Its legal requirements apply to California; use your own state's resources and the actual contract to check a plan elsewhere.

Before you choose, put two or three sample contracts side by side and check each one off:

• Which systems and appliances are listed, and which add-ons cost extra?
• What is the per-item cap and the annual aggregate cap?
• Which failures are excluded, and does the contract repair an item, replace it, or pay a fixed cash amount?
• Is the provider licensed or registered in your state? Our state-by-state regulation guide shows where to check.

Once you know what you want covered, you can see which companies serve your area and what they charge by entering your ZIP.