Home Warranty FAQ
The Discover Insurance Center doesn’t just offer insurance, it offers insurance education too. Get the answers to some of the most commonly asked insurance questions, so you can be empowered with information.
- What is an existing home warranty and how is it different from a new home warranty?
- A new home warranty is a contract between the new home builder and the buyer. With an existing home warranty, the warranty company takes the burden off the existing home buyer by providing a service contract that covers an existing home’s major operating systems and appliances for one year. Industry data shows that over the last decade there has been an increase in home warranty usage. In California, nearly 9 out of every 10 existing home sales now include a home warranty.
- Can I buy additional coverage?
- Most existing home warranty companies provide additional protection for items such as air conditioners, washers, dryers, refrigerators and spa and swimming pool equipment. Home buyers or sellers should look at the amenities on the property, review the policy and what it covers and then decide whether to purchase expanded coverage.
- Is there a total dollar limit on the coverage of the existing home warranty policy? Is there an individual item coverage limit?
- Typically, there are no limits on the coverage of an existing home warranty policy, except for certain items, such as plumbing lines buried in concrete. An array of options are available to upgrade a basic policy.
In general, a home warranty company is excluded from repairs that stem from a manufacturer’s recall of covered items or to items that are still under an existing manufacturer’s, distributor’s or in-home warranty. Again, consumers are urged to review their policies to see what exactly is covered. - Will the broken item be repaired or replaced?
- Most likely items will be repaired before being replaced, as it is usually less expensive.
- Is an existing home warranty policy insurance or a service contract?
- An existing home warranty is a service contract, not an insurance policy.
- Who regulates home warranty companies in each state?
- The Commissioners of Insurance regulate home warranty companies in most states. No state treats a home warranty as a true insurance policy and most states explicitly say that home warranties are not insurance, but rather service contracts.
- How long will it take the company to send someone out to look at what is wrong in my house?
- An existing home warranty company should respond in a reasonable amount of time. Many home warranty companies provide emergency service at night, on weekends and on holidays.
- Is there a guarantee or warranty on the item that is repaired or replaced?
- The contractors used by home warranty companies usually guarantee their work for a period of time after the job. If an item is replaced, the manufacturer’s warranty would be in effect.
