What is a home warranty?

A home warranty is a service contract designed to cover the repair or replacement of major home systems and appliances that may fail over time due to wear and tear. This can include items such as HVAC systems, plumbing, electrical systems, dishwashers, and refrigerators. Unlike homeowners insurance, which typically covers damage to the home and liability, a home warranty focuses specifically on maintenance and repair costs associated with the functionality of essential home components.

This distinction is important as it emphasizes the preventative and maintenance aspect of a home warranty. Homeowners often purchase these warranties to safeguard against unexpected repair expenses, thus providing peace of mind.

In contrast, other options relate to different types of protections. A contract that covers property damage and liability refers more to homeowners insurance rather than a warranty. A type of insurance specifically for home buyers suggests an insurance product rather than a warranty service. Finally, while a financial product that provides cash for home repairs may involve payments for repairs, it does not directly equate to covering specific appliances or systems like a home warranty does.