What is a Home Warranty and How Does it Work?

home warranty

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When it comes to buying a home, most people understand the importance of having homeowner’s insurance, but few people are actually familiar with a home warranty and how it works.

The simple answer is:  A home warranty is a yearly service contract that protects specific home systems and appliances.

Your home’s systems and appliances will inevitably break down over time. A home warranty provides you with some protection when those systems and appliances eventually stop working. Many first-time homebuyers find a home warranty to be an extra layer of protection when extra funds are in short supply during those first few years of homeownership.

How does a home warranty work?

Home warranties work very similar to how insurance works. The homeowner signs up for a service contract, typically for a one-year period, and chooses the level of coverage they need. When it’s time to make a claim, you follow these steps:

  1. File a claim with your home warranty company when a system or appliance breaks down
  2. A service provider will be chosen to help with your claim
  3. The service provider will call you to schedule a service technician to come to your home.
  4. The technician will assess the issue and either fix or replace items based on the coverage provided by your warranty.
  5. You’ll pay a service call fee, similar to a deductible like you would with insurance that typically costs between $50 and $100 per visit.

What’s covered?

A home warranty can be useful especially if you have older systems and appliances that require several service or repair requests in the same year. Depending on the coverage that you choose, many of the systems and appliances you value and want to protect are included:

  • Air conditioning
  • Dishwashers
  • Doorbells
  • Furnace/heating
  • Water heater
  • Duct work to code
  • Garbage disposals
  • Inside plumbing stoppages
  • Ceiling fans
  • Electrical systems
  • Oven and range
  • Telephone wiring

How much does a home warranty cost?

Pricing depends on what you want covered, and the size and age of your home.  Some plans just cover the big basics such as plumbing, heating and electric – and can range from $350-$650 for a year – paid in full up front.  Other more robust plans cover appliances, hot tubs and everything in between – those will be a bit more expensive.

Benefits of a home warranty when your home is for sale

Whether you are buying or selling your home, a home warranty can be a great perk. For buyers, a home warranty can protect them from costly repairs that may happen unexpectedly after just closing on a new home. No one wants to get the keys to their new home just to find out that the furnace blew up.

For sellers, not only is a home warranty a benefit to the new owner, but it also protects the seller from any unexpected breakdowns while the home is for sale.

What’s Not Covered?

As with your homeowner’s insurance, every policy is different, and you need to read the fine print.  Some policies will exclude outdoor plumbing for pools and spas, while others include it.  You may also have trouble getting items covered if you don’t properly maintain them, or have them improperly installed, or they show unusual wear and tear. Before you sign the dotted line, make sure you are crystal clear on what is covered and what is not.

Home warranties help make the repair process straightforward by giving homeowners one number to call and one service fee to pay any time something breaks in their home instead of having to search for a specialist each time and hope their fees don’t break the budget.


Jennifer Ives-Groebl
Vice President, Senior Mortgage Lender
NMLS MLO ID: 532621

Author: Jennifer Ives-Groebl

Jennifer has been with Litchfield Bancorp since 1994 and was promoted to Assistant Vice President and Senior Mortgage Originator shortly after graduating the Connecticut School of Finance & Management in 1998. Stationed in both our Torrington and Litchfield locations, Jennifer is well known and respected in the local residential real estate community and recognized as a resource for some of the more difficult transactions. Jennifer resides in Torrington and is actively involved in the local community. She is a long time member of the Torrington/Winsted Rotary club and is currently serving as its Assistant Treasurer. Jennifer is involved with Litchfield County Board of Realtors and serves as chair of the Audit Committee and a member of the Public Relations Committee. She is also a member of the Fuessenich Park Partnership; and through Education Connection, has participated in the Mentoring Program.