A home warranty is basically an insurance policy.  It insures the mechanical, electrical and plumbing parts and systems of a house.  A home warranty provides the same comfort as any insurance against unforeseeable events.  Many homeowners claim that their warranties have more than paid for themselves.


While each home warranty company operates a little differently, there are some basics that apply.  Each has a "basic" plan that covers routine heating, plumbing and electrical systems.  In addition, they offer optional coverage for air conditioning, pools and spas, appliances, etc., charged on a per item basis.  Some companies offer more comprehensive "basic" plans that cover features such as irrigation systems and garage door openers.

A home warranty plan can be ordered at the time your home is placed on the market. This will protect you during the listing period, usually not exceeding six (6) months, and then it will be assumed by the buyer at the time of the sale. A home warranty may also be purchased during the escrow process, and some home warranty companies will allow the buyer to make the decision to have a plan initiated after purchase.


First, the application is completed and submitted to the home warranty company, either by phone or by fax.

The application should specify which plans and options are being ordered, and include the listing agent's name and the property information.  Some companies offer different plans depending on whether it is for a listing or for a sale. For example, some companies offer more options to the buyer at the time of the sale than to you, the seller, at the time of the listing. Some, but not all, companies require a mechanical inspection prior to approval of the application. In this case, a report of the inspection is faxed to the ordering agent with the results. Upon approval, the policy is in effect.

Depending on the company, when service is needed, the policyholder may be required to call the warranty company, provide their policy number, state their problem and then wait for a call from an outside service company (within 24 hours) to arrange for service.  Some companies allow the policyholder to call the warranty company's in-house service department directly to arrange for service.


Most home warranty plan payments are not due until close of escrow.  At that time, a copy of the invoice listing the coverage ordered is sent to the escrow company for payment (along with an inspection report, if requested). A copy of the policy is then mailed to the new policyholder.  During the transit period, the policy is in effect.
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