What Is Home Warranty?
Home Warranty: A service contract that covers repair or replacement of home systems and appliances for a fee.
A home warranty is a one-year service contract that covers repair or replacement of major systems (such as heating, cooling, plumbing and electrical) and appliances when they fail from normal wear.
How it works
You pay an annual premium, often $400 to $700, plus a service fee per claim. The warranty company sends a contractor.
Home warranty vs. homeowners insurance
Homeowners insurance covers damage from events like fire or storms. A home warranty covers breakdowns from age and use.
Negotiating
Sellers sometimes pay for a one-year warranty as a concession. Read what's excluded, such as pre-existing conditions, and the coverage limits.