Home warranties protect many crucial home appliances and systems from the inevitable breakdowns that happen from normal wear and tear. They provide valuable protection for your budget and make it easy for you to request service when covered systems and appliances break. Like insurance, service contracts, and other types of warranties, however, home warranty plans have limitations.
For example, a home warranty doesn’t cover cosmetic damage. Nor will a home warranty cover misuse or neglect, or when items may be covered under your homeowners insurance policy (for example, from damage due to a fire, extreme weather, and so on). Read more about the differences between a home warranty versus homeowners insurance. Home warranties also typically won’t cover changing or modifying your home’s structure to repair or replace covered systems and appliances.
Modifications and changes needed for new equipment
Typically, home warranty plans don't cover any modifications or changes needed when new, replacement equipment gets installed. Why are changes or modifications sometimes required? This can happen when the new equipment for a covered item is a different size, or building codes have changed since the old equipment was installed.
For many home appliances, this isn’t an issue. If a covered appliance, such as an oven or dishwasher breaks and can’t be repaired, First American Home Warranty will replace it with a unit of similar features and capacity. Because most kitchen appliances are standard sizes, replacement can be more straightforward and not require modifications to kitchen countertops or cabinets.
However, if an older water heater breaks, for example, and can’t be repaired, this could be a different story. New water heaters are far more energy efficient, but the extra insulation means they are considerably taller and wider than their older counterparts. There may also have been changes to local building codes since an older water heater was first installed. In both cases, this could mean changes are needed to the pipes that go in and out of the water heater. So, while the cost of the water heater replacement may be covered, the cost of modifying the structure, changing the pipes, or adding new equipment typically would not be covered.
Similarly, if your furnace or air conditioner needs replacement, a new energy-efficient unit may be a different size or have different power requirements, even though it provides the same output and capacity. This could mean electrical or structural modifications are needed to accommodate the new unit. In this case, a home warranty would cover the replacement air conditioner, but usually not the cost of any modifications needed for the new unit.
Home systems and appliances that are already broken
In most situations, home warranties do not cover pre-existing conditions, such as a home system or appliance that was broken before the home warranty coverage began. Some plans purchased as part of a real estate transaction will protect you from unknown pre-existing conditions – if, when coverage begins, the defect wasn’t known or could not have been reasonably observed by looking at or operating the system or appliance.
Secondary damages when a system or appliance breaks
To understand secondary damages, it can be helpful to first understand how homeowners insurance and home warranties work together to protect your home. Homeowners insurance protects the structure of your home (among other things),while home warranty protection covers many of the home appliances and system you rely on every day.
So what are examples of secondary damages that a home warranty doesn’t cover? For example, if your dishwasher breaks, a First American home warranty plan could cover repairing or replacing the appliance (primary damage). If the broken dishwasher causes your kitchen to flood, however, any water damage is considered “secondary damage.” The water damage would fall under the coverage of your homeowners insurance.
Similarly, let’s say a leaking pipe or clogged toilet floods your second-story bathroom and causes water damage. A home warranty will cover fixing the leak or stoppage, but damage caused by the water, to things such as flooring and the first-story ceiling, would be covered by homeowners insurance.
Other things home warranties don’t cover
Home warranties also typically do not cover things such as:
- Cosmetic defects, such as scratches or dents to kitchen appliances.
- Damage from pests.
- Improper installation, misuse, or neglect.
- Items covered by a manufacturer warranty.
Things home warranties may cover
Home warranty plans cover many home systems and appliances, but you may have additional items you want to cover. You can also add optional coverage for items such as pools, spas, and well pumps to your home warranty coverage.
With First American Home Warranty, you can also include the First Class Upgrade option that will cover items such as:
- Removal of the old appliance or system.
- Correction of improper installations.
- Building permits.
- Correction of building code violations.
- And more.