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What is a residential service contract and how does it work?



Home appliance repairs are an inevitable part of a modern-day household. Leaky faucets, loud thumping sounds in the washer, or installing an HVAC unit amid a heatwave — you never know when trouble could knock on your door.

Rather than depleting your hard-earned savings to fix them, it’s a good idea to purchase a residential service contract that alleviates the cost of appliance repairs. 

Without a residential service contract, you might have to jump through hoops and hurdles to get your appliance up and running again. 

In this article, we define residential service contracts, how they work, and what’s covered under them. We also discuss why they are a smart investment for you. 


What is a residential service contract?

A residential service contract is a service agreement that offers financial protection for your home's essential appliances in the event they break down due to usual wear and tear. From buyers, sellers, homeowners and landlords — it benefits all. 

Homeowners need to be prepared for times when appliances or built-in systems break down. If such repairs are neglected, they can put your home and family in danger. 

By having a home warranty contract in place, you can breathe easier because you are assured that any future repair can be promptly fixed, and you won’t have to dig a hole in your pocket. 

You can buy a residential service contract whenever you want to. However, the sooner, the better.

It hugely benefits sellers during the home-selling process. Including a home warranty strengthens the home’s value. Homebuyers can be assured that any repairs and replacements in their new home are taken care of. 

Note: A residential service contract is different from a homeowners insurance policy. It's a separate contract that covers repairs on appliances in your home.

Is a residential service contract the same as a home warranty?

Yes, a residential service contract, or RSC, can also be referred to as a home warranty. Alternatively, a home warranty can be called a home protection plan, a home service plan or a home service contract. Companies that provide home warranties can be called residential service companies.


How do residential service contracts work?

Residential contracts work differently across different home warranty providers. Let's take a look at how Cinch Home Services warranty plans work:

  • Pick plans that are convenient. No two households need the same kind of coverage or have the same budget. That’s why Cinch has protection plans for all needs. 
  • Request service when you need it. Surprise breakdowns can cause a great deal of panic. With Cinch, request service online no matter what time of the day, including holidays and weekends.
  • Get an expert to fix your appliance. Cinch has a robust network of thousands of vetted technicians. It will match your repair request with the right technician to get your appliance back up and running quickly.

That’s how easy it is to get a home warranty plan by Cinch. What’s more? No home inspections are needed. Get a quote here


What’s covered under a residential service contract?

Home warranty coverage can include both appliances and systems. 

However, the coverage limits may vary from policy to policy, and some exclusions may exist.

Mostly, a home service contract takes care of appliances and built-in systems no matter how old they are. 

For example, Cinch plans come with a 180-day workmanship guarantee, provide proper protection from unknown pre-existing conditions, and fix any damages caused due to rust and corrosion. 

It is best to check directly with your home warranty provider regarding what your residential service contract covers.

Cinch offers some great home warranty plans. They come in three types: Appliances, Built-in Systems and Complete Home. Here is what each home warranty plan by Cinch covers:

  • Appliances. If you are looking for a basic plan with modest coverage, the Appliances Plan is the right choice. It covers major appliances, like garage door openers, dryers, garbage disposals, microwaves, dishwashers, clothes washers and refrigerators. Learn more about this plan here.
  • Built-in Systems. Built-in home systems can be hard to repair and costly too. If your home has several built-in systems, this is the perfect plan for you. It covers everything from your air conditioning (that includes ductwork) and equipment breakdowns in your water heater and plumbing to electrical systems — along with tons more items. Learn more about this plan here. 
  • Complete Home. If you are looking to cover all your appliances and built-in systems, the Complete Home Plan provides you with all-inclusive and extended warranty coverage. Learn more about this plan here.


Are residential service contracts a smart investment?

According to HomeAdvisor, “A home warranty typically costs $1,030 per year, and average prices fall in the $220 to $1,843 range.”

Along with the annual premium, you may have to pay a small fee for service calls. Different warranty providers have different service fees. But without a home warranty, you could end up spending hundreds or even thousands of dollars to repair or replace major appliances or systems. 

As per HomeAdvisor, below are the average national costs to replace or repair some essential home systems:

Quite astronomical expenditures, right? Home warranty plans can save you from such scary costs. 

  • Peace of mind. In case you purchased a residential property furnished with secondhand appliances or older systems, a home warranty plan comforts you because you don’t have to spend exorbitant money on appliance renewals or replacements. That’s covered under the home warranty plan.
  • Super-convenient. When your appliance breaks down, all you need to do is file a claim with your home warranty company, and an approved contractor will call you to access the repair. Once the problem is located, the technician will visit you to promptly repair your appliance. No need to scour the internet mindlessly to find technicians. 
  • No need for DIY skills. While some appliance repairs can be fixed with DIY skills, some repairs need expert intervention and special tools that are not easily available at home. 
  • Relatively inexpensive. Average monthly fees of home warranty plans are less than $100. 

Home warranty plans ease the process of selling a home too:

  • Firstly, an RSC alleviates the risk that the buyer will seek additional help from you if a home appliance surprisingly fails right after the sale.
  • Secondly, you can provide the buyer with a home warranty contract, especially at the close of your sale. This tactic can easily convince the buyer to seal the deal with you and stop them from going with another property holder.
  • Thirdly, with a home service contract in place, you can easily discuss repairs with prospective buyers. It helps with transparency, especially if the property is furnished with older devices that will require a replacement in the near future.

A home warranty plan eases the entire process for REALTORS too, helping them close deals quickly. 


Discover the ideal Cinch home warranty options for you

Don’t let sudden home appliance or built-in system breakdowns cause you a headache. 

Whether it’s due to normal wear and tear or the appliance is simply old, a home warranty has you covered.

No need to scroll through the internet or call your neighbors to find the right technician. A home warranty assures you that vetted technicians will take care of your appliance-related problems with precision. And of course, you can avoid a humongous outlay of cash.

Cinch’s plans are easy to access and cover all your essential major home appliances or built-in systems, depending on the home warranty plan you choose. 

All you need to do is pay a small service fee (or a deductible), and the rest of your repair or replacement costs are covered by the warranty. Get a quote today!


Learn everything you need to know about a residential service contract and why you need one.