Home Service Agreements: Your Guide
A Home Service Agreement, also called a Home Warranty Service Agreement, makes protecting your home simple and affordable. Whether you’re in the midst of a real estate transaction or a longtime homeowner, a Home Service Agreement can benefit you greatly. Use this guide to learn what a Home Service Agreement is, and what is and isn’t covered in your Service Agreement, and the pros and cons of a Home Warranty Service Agreement.
What is a Home Warranty Service Agreement?
A Home Warranty Service Agreement is an annual service contract that provides coverage for your home’s systems (e.g., your air conditioning and plumbing) and appliances (e.g., your refrigerator). When covered home systems and home appliances break down from routine wear and tear, your Home Service Agreement can reduce the repair costs and replacement costs.
How is a home warranty different from a manufacturers warranty?
Typically, a manufacturers warranty covers repairs, service and sometimes replacement of a specific appliance. Coverage usually spans 1 year from the date of purchase. If you purchase an extended warranty, the coverage will last longer but cost extra.
Unfortunately, manufacturers warranties and extended warranties only cover the original purchase that the original owner made. So, if you recently purchased a home that included relatively new appliances, any manufacturers warranties on those items do not transfer to you after you complete the real estate transaction.
A Home Service Agreement (or home warranty plan), on the other hand, can transfer among owners after a real estate transaction and still cover the cost to repair or replace specified home systems and home appliances.
Similarly, manufacturers warranties will only cover one specific item. So, if you want warranty coverage for all of your appliances, you would have to purchase a unique warranty for each one. This can get complicated and expensive.
A home warranty covers several different systems and appliances under one plan for a relatively small fee. That’s much simpler and more affordable.
What Does a Home Warranty Service Agreement cover?
A Home Warranty Service Agreement can cover many different things, depending on the plan you choose and options you add. It’s important to remember that a Home Warranty Service Agreement complements your homeowners insurance.
The 2-10 Home Buyers Warranty (2-10 HBW) Home Warranty Service Agreement covers the costs to repair or replace several systems (e.g., plumbing) and appliances. This contract covers both parts and labor for the following systems and appliances.
- Heating, including furnace
- Cooling, including air conditioning
- Plumbing, including certain pipe leaks
- Electrical, including wiring
- Water heater
- Built-in microwave
- Garbage disposal
- Trash compactor
You can also purchase additional coverage to your protection plan to address other systems and major/built-in appliances.
- Additional refrigerator
- Built-in wine cooler
- Free-standing freezer
- Extended pipe leak
- Washer and dryer
- Roof leak
- Septic system
- Pool and spa equipment
- Water softener
- Well pump
Always be sure to read your contract to understand your coverage, both before you purchase it and when you intend to request service. Fortunately, 2-10 HBW’s Service Agreements are upfront and transparent about what is and isn’t covered.
What may not be covered by a Home Warranty Service Agreement
Though Service Agreements can be comprehensive, they aren’t all inclusive. As always, be sure to check the specific coverage details in your Home Service Agreement before you submit a service request. Here’s a list of things that typically aren’t covered by a home warranty.
- Generally speaking, anything that would be covered by a home insurance policy will not be covered under a Home Warranty Service Agreement. This may include the following:
- Storm damage
- Fire damage
- Accidental injury or death on your property
- Damage to a home system or appliance caused by neglect or malice on the part of the homeowner.
Some warranty companies, like 2-10 HBW, offer flexible packages that can expand your protection plan to include things like septic systems, hot tubs and swimming pools.
Pros and cons of a Home Warranty Service Agreement
One of the biggest advantages of a Home Service Agreement are that it can save you money out-of-pocket expenses and make addressing breakdowns more convenient. It often complements your homeowners insurance, giving you comprehensive protection for your biggest investment. But there are some downsides to a home warranty that you should know about, too.
To help you make the best possible decision, we’ve put together a list of pros and cons of Home Warranty Service Agreements.
Pros of a home warranty
- Covers repair costs for qualified systems and appliances, so you save on upfront costs
- Covers the cost to replace systems and appliances, if required
- Addresses unexpected expenses of home ownership, removing potential obstacles to home ownership
- Can cover major appliances and systems no matter their age
- Much less expensive than paying for warranty coverage on each individual appliance
- Provides peace of mind, a greater sense of security and budget protection
- Complements homeowners insurance, so you get comprehensive insurance protection for your most valuable investment
Cons of a home warranty
- Expires each year, so you must renew annually
- Does not cover problems that existed prior to purchasing the Service Agreement
- A home warranty company may limit your repair options to a specific contractor or service provider
- May have coverage limits, so you are responsible for anything beyond the coverage limit stated in the contract
- Customer must pay a Service Fee to the Service Contractor upon arrival, which can range from $75 to $125
- Still requires an insurance policy, as Home Warranty Service Agreements do not cover acts of God, fire or theft
Though home warranties do have some cons, the pros far outweigh them. A 2-10 HBW Service Agreement is easy to renew, and the annual cost (and possible fee paid to the contractor) is nothing compared to the costs and complications of managing a major repair or replacement on your own. Plus, 2-10 HBW offers superior customer service to help you when you need it most.
If you want to make protecting your home and your budget simple and affordable, 2-10 HBW can help you. Get a free quote to see what peace of mind is worth to you.
2-10 HBW offers the most comprehensive home warranty coverage for homeowners. Let us help you protect your home.