How does a home warranty work?

Understanding what's covered, the claims process and deciding if it's for you

Key tips to remember

  • Most contracts are for 12 months
  • Costs will vary depending on coverage level, location and other factors
  • Shop around to make sure service pros are qualified and work is guaranteed

At Cinch, we strive to make things simple and stratightfoward. So, here's a quick summary on how a home warranty works, so you can decide if a home warranty is worth it in your financial situation.

What is a home warranty and how does one work?

A home warranty is (sometimes called a home protection plan or home service plan) a service agreement between you and the warranty provider. Generally, here's how a home warranty works:

  • Contracts are usually 12-months. You pay an annual fee that varies in price depending upon where you live, what the home warranty covers and how much (or how little) you prefer to pay out of pocket when you have a claim.
  • The out of pocket cost is known as a deductible, service fee or trade service fee. There's a wide range across all home warranty companies, but you can expect most to be $150 or less — usually significantly less than the cost of repairing or replacing things yourself.
  • Most providers give you the option to pay your annual home warranty price (or premium) upfront or pay in monthly installments. A higher deductible will usually reduce your annual premium.
  • In return, the provider takes on the risk that one of your covered appliances or systems will break down.
  • Covered appliances typically include the major items in your kitchen like your refrigerator plus washers and dryers and more.
  • "Systems" can be tougher to decipher. It commonly refers to heating, air conditioning, electrical and plumbing; and may include additional items like bathroom fixtures, plumbing, ceiling fans, ductwork and more (see everything covered by Cinch home warranty plans here).

How does the claims process work?

Requesting service from your home warranty company should be quick and easy. With Cinch, if one of your covered appliances or home systems breaks down, you can simply go online and submit your claim in under a minute. Your job will be assigned to a pre-qualified, local service pro, who will come to your home to  either fix the problem or verify that the appliance is broken beyond repair.

Depending on the company, you pay the deductible or service fee at the time your submit your claim, or when the service pro comes to your home.

What happens after the repair?

In the unlikely event that your repair isn't performed correctly the first time, you don't want to have to pay out of pocket again. The warranty provider should be willing to remedy the situation at no additional cost to you. So, it's a good idea to see if the warranty provider offers any guarantee on repairs and workmanship. (At Cinch, we guarantee covered repairs and replacements for six months.) 

Should I purchase a home warranty?

Every homeowner wants to keep things running smoothly. That said, there are some situations in which you definitely should purchase a home warranty including: 

  1. You are purchasing a home. It can be difficult to assess the condition of all of the appliances in a home — even with a home inspection. In the period immediately after purchasing a home and moving in, many homeowners' budgets are stretched. The last thing you want to be faced with is a large repair expense.
  2. You don't have a large cash cushion. Most of us don't have as much saved up as we'd like. Limiting your out-of-pocket costs provides peace of mind.
  3. You don't "know a guy" who can fix things. If you don't already have a trusted contractor on speed dial, it can be hard to know if you're being swindled. Cinch manages a nationwide network of contractors who are vetted for licensing, background checks and other qualifications; plus, the deductible means you know exactly how much you'll pay for the service call.
  4. Your home or appliances are several years old. After the manufacturer warranties expire and things start to wear out, breakdowns become more likely.

Now that you know how home warranties work when buying a home, if you're ready to protect your home and budget, get a free online home warranty quote in just a few seconds, or call us with questions. We're here to make it easier to understand how a home warranty works, and there's never any obligation. 

The information in this article is intended to provide guidance on the proper maintenance and care of systems and appliances in the home. Not all of the topics mentioned are covered by our home warranty or maintenance plans. Please review your home warranty contract carefully to understand your coverage.


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