Mind the Gap

A home warranty covers items insurance doesn’t.

Illustration by Peter & Maria Hoey

A home warranty covers the appliances and systems, like heating and air conditioning, left out of homeowners insurance. “I recommend a warranty to all of my buyers and sellers,” says Pam Davis, a Realtor with Long & Foster in Richmond. “I think it’s critical.”

On the seller’s side, a warranty removes the pressure to make the house perfect before you put it on the market. It’s easier and less expensive to offer a warranty than to replace an aging HVAC system, for example. One company, American Home Shield, offers a full-home policy for less than $600 per year. Plus, says Davis, “The seller can use the policy if a problem is spotted during the inspection process or something breaks while the home is on the market. It saves you that out-of-pocket expense.”

From the buyer’s perspective, a warranty offers peace of mind should something go wrong once you move in. Systems can break due to age or if your usage patterns are different from the previous owners’, says Davis. With a warranty, the company will send someone to repair or replace the appliance for the price of a copayment (usually around $100).

Consumer Reports encourages homeowners to read their warranties carefully to understand the coverage, stating, “We found that some policies will cover your refrigerator, but not the icemaker that comes with it.” Also, a warranty provider might offer to replace an item, but only pay the depreciated value, “requiring you to pay more to get the same model you had before.” Finally, a plan might limit the payout per incident, home, or year, reducing its effectiveness if several things break at once. 


This article originally appeared in our June 2019 issue.

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