What is a home warranty and should a buyer or seller get one?

A home warranty is a service contract, usually for one year, that can cover repairs or replacements for covered systems and appliances, like the HVAC, plumbing, electrical, and kitchen appliances.

When something covered breaks, you file a claim and pay a service fee, and the warranty company arranges the repair.

Homeowners insurance protects against sudden damage, like fire or a storm. A home warranty covers the wear-and-tear failure of systems and appliances.

They serve different purposes, and a warranty does not replace your insurance.

Sellers sometimes include a home warranty as a gesture of confidence and to make the buyer's first year feel safer. It can smooth a negotiation and give the buyer reassurance.

It can also reduce requests for repairs before closing, since the buyer knows covered items are protected.

For a buyer, a warranty can be worth it on an older home or one with aging systems. Read what is actually covered, because exclusions and limits vary by policy.

A home inspection remains essential, since the warranty covers failures, not pre-existing conditions you can see.

I can explain how a warranty fits your specific home and purchase, and when it is worth asking for one in the negotiation.

You decide with a clear understanding of what it does and does not cover.