Real Estate Transactions
What Is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of major home systems and appliances — such as HVAC, plumbing, electrical, and kitchen appliances — for a specified period, typically one year.
Home warranties are different from homeowner's insurance and different from a builder's warranty. Understanding the distinctions is important for agent advising and appears on many state licensing exams.
Home Warranty Basics
What It Covers
Typically covers HVAC systems, plumbing, electrical, water heater, dishwasher, oven/range, refrigerator, garbage disposal, and sometimes washer/dryer. Coverage varies by plan and provider — always review specific terms.
What It Does Not Cover
Pre-existing conditions (usually excluded), improper installation or maintenance, cosmetic defects, structural issues, and items excluded in the contract. Home warranties have coverage caps per repair category.
Who Pays
In real estate transactions, sellers often offer a home warranty as a sales incentive. Buyers can request a warranty in the purchase contract. The cost is typically $300–$700 per year. Either party can pay depending on negotiation.
Home Warranty vs. Insurance
Homeowner's insurance covers sudden, accidental events (fire, theft, storm damage). A home warranty covers mechanical failure due to normal wear and tear. They serve different purposes and are not substitutes for each other.
Exam Key Points: Home Warranties
Home warranties cover systems and appliances — NOT structural damage or sudden events
Homeowner's insurance covers sudden/accidental damage — NOT mechanical wear
New construction builder warranties are separate from home service warranties
Sellers frequently offer warranties to incentivize buyers and reduce post-sale disputes
Coverage, caps, and exclusions vary significantly between providers
A home warranty does NOT replace the need for a home inspection
Definition Page Pillars
Use this term page as a concept layer, then return to pillar pages for full workflow review.