What a home warranty actually covers after closing

A home warranty is a service contract, not insurance. It pays to repair or replace listed appliances and systems if they fail from normal wear, after you pay a trade-call fee. It does not cover known defects, poor maintenance, or damage from storms and leaks that a homeowners policy would handle.

Read the exclusions before you buy at closing. Many contracts skip pre-existing conditions, poorly installed units, and items past a certain age. A 15-year HVAC system may be “covered” until the contractor arrives and codes it as at end of life.

File a claim as soon as something fails. Using your own technician can void the contract. The warranty company sends its contractor; you pay the service fee whether they fix it, replace it, or deny it.

Price the first-year premium against a cash reserve. If you already have $2,000 set aside for a water heater or a range, you may not need the contract. If the house is older and you cannot absorb a $7,000 HVAC bill, the warranty is a budget tool, not a guarantee.