What to Ask Before You Buy a Home Warranty

Ask these questions before signing a home warranty contract

A home warranty contract is a sales document, and the company writing it has reasons to keep the terms narrow and the exclusions broad. Before you pay, you need to know what the warranty actually covers, what it costs you to use it, and what happens when you disagree about whether something is covered. The questions below will surface the real limits of the contract you are about to sign.

Read the actual contract, not the marketing summary. Ask the company directly about anything unclear. Get answers in writing if you can — a screenshot of an email or a chat transcript counts. If the company won't answer a question clearly, that is information too.

Key Takeaways

• Home warranty contracts have waiting periods (often 30 days) before coverage starts, and they exclude pre-existing problems, so coverage does not begin the day you sign.
• Most warranties cap what they will pay per service call and per year, and many require you to use their contractor network rather than your own, which limits your choice.
• Service call fees (typically $75 to $150) come out of your pocket every time you file a claim, regardless of whether the repair is covered.
• The contract defines what counts as "normal wear and tear" or "maintenance" — the company's definition, not yours — and those items are not covered.
• You need to know the cancellation terms: whether you can cancel mid-year, whether you get a refund, and how much notice you must give.

What does this warranty actually cover?

Get a list of every system and appliance covered. Most warranties cover major systems (heating, cooling, plumbing, electrical) and some appliances (water heater, refrigerator, dishwasher), but the specifics vary widely. A warranty that covers your air conditioner may not cover the compressor, or may cover it only if it fails suddenly — not if it fails gradually.

Ask whether the contract covers parts, labor, or both. Some warranties pay for the part but cap the labor cost, or vice versa. Ask what happens if the repair costs more than the cap — do you pay the difference, or does the company refuse the repair? Ask whether the warranty covers the cost of diagnosing the problem (the service call itself) if nothing is found to be wrong.

Request the exclusions list in writing. This is the most important document. It will name things like "pre-existing conditions," "normal wear and tear," "maintenance," "cosmetic damage," and "improper installation." The company's definition of these terms is what matters, not yours. Ask for examples: if the air conditioner stops working after five years of use, is that normal wear and tear or a covered failure? If the dishwasher leaks because the seal has degraded, is that maintenance or a covered repair?

What are the waiting periods and exclusions?

Most home warranties have a waiting period before coverage begins — typically 30 days for most systems, but sometimes longer for certain appliances. This means if your water heater fails on day 15, it is not covered. Ask whether the waiting period applies to every system or only some, and whether it resets if you renew the contract.

Pre-existing conditions are almost always excluded. The company defines this as any problem that existed before the contract started, whether you knew about it or not. Ask how the company determines whether something is pre-existing — do they inspect the home, or do they rely on your disclosure? If they inspect, who pays for that inspection? If they rely on your word, what happens if they later claim you should have known about a problem?

Ask about the "maintenance" exclusion. Most warranties do not cover repairs that result from lack of maintenance — for example, an air conditioner that fails because the filter was never changed. Ask what maintenance the company expects you to perform, and how you prove you did it. Do you need receipts? Photos? A service log?

What does a service call actually cost you?

Every time you file a claim, you pay a service call fee directly to the warranty company. This fee is separate from the annual premium and is not refundable. Typical service call fees range from $75 to $150, though some companies charge more. Ask what the fee is for your specific plan, and whether it applies to every claim or only some.

Ask whether the service call fee is waived if the repair is not covered. Some companies charge the fee regardless; others waive it if the problem turns out to be excluded. Ask what happens if you call and the contractor determines the problem is not covered — do you still pay the service call fee, or only if the repair is performed?

Ask whether you can use your own contractor or whether you must use the company's network. If you must use their network, ask how you find a contractor and how long it typically takes to get someone to your home. If you can use your own contractor, ask whether you pay upfront and then submit a claim for reimbursement, or whether the warranty company pays the contractor directly.

What are the annual and per-service limits?

Most warranties cap the total amount they will pay in a year, and many also cap what they will pay for a single repair. Ask what these caps are. If the annual cap is $5,000 and you have two major repairs, the second one may not be fully covered. If the per-service cap is $1,500 and your furnace replacement costs $3,000, you pay the difference.

Ask whether the caps reset each year or whether they are lifetime limits. Ask whether the caps apply per system (one cap for plumbing, another for electrical) or to all claims combined. Ask what happens if a repair exceeds the cap — does the company pay up to the cap and you pay the rest, or does the company refuse the repair entirely?

What are the cancellation terms?

Ask whether you can cancel the warranty before the contract term ends, and if so, whether you get a refund. Some companies offer a pro-rata refund (you get back a portion of the annual premium based on how many months remain), while others offer no refund at all. Ask how much notice you must give to cancel — some require 30 days, others require more.

Ask whether the company can cancel on you. Most warranties reserve the right to cancel if you do not maintain the home properly, if you make too many claims, or if you commit fraud. Ask what "too many claims" means — is there a limit per year? Ask what happens to your coverage if the company cancels — do you have time to find another warranty, or does coverage end immediately?

What happens if you disagree about coverage?

Ask what the dispute process is if the company denies a claim you believe should be covered. Do you have the right to appeal? Is there a third-party arbitrator, or does the company make the final decision? Ask whether you can take the company to small claims court or whether the contract requires arbitration. Read the arbitration clause carefully — it may require you to pay for arbitration, or it may limit what you can recover.

Ask whether the company has a complaint history with your state's attorney general or with the Better Business Bureau. This is public information and worth checking. Ask whether the company has been sued over claim denials, and if so, what the outcomes were.

Frequently Asked Questions

Can I buy a home warranty right after I buy a house?

Yes, but the waiting period means coverage does not start immediately. Most warranties have a 30-day waiting period, so if you buy a warranty on the day you close, coverage begins 30 days later. Pre-existing problems are excluded regardless of when you buy the warranty.

What if the warranty company goes out of business?

Your coverage ends. Home warranties are not insured by a government agency the way homeowners insurance is. Before you buy, check how long the company has been in business and whether it is financially stable. Ask whether it is backed by a larger insurance company.

Does a home warranty cover things homeowners insurance covers?

No — they cover different things. Homeowners insurance covers sudden damage from events like fire or theft. Home warranties cover mechanical failure of systems and appliances. You need both. Ask your homeowners insurance company what is covered under your policy so you do not buy a warranty for something already insured.

What if I sell the house — does the warranty transfer?

Some warranties transfer to the new owner for a fee; others end when you sell. Ask whether transfer is automatic or whether the new owner must request it. Ask what the transfer fee is, if any. This matters if you are selling soon — a transferable warranty may be a selling point.

Should I buy a warranty from the home builder or from a third party?

Read both contracts side by side. Builder warranties often cover structural defects for a set period (typically one to ten years depending on the defect), while third-party warranties cover mechanical systems and appliances. They serve different purposes. Ask whether you can have both, and whether either one excludes problems the other covers.