Adding a home warranty policy is a smart idea if you want to protect your home. Home warranties give you additional peace of mind by covering damages to your home’s major systems and appliances.
Generally, most home warranty policies include terms and conditions. One of these conditions is the home warranty waiting period. If you’re considering investing in a home warranty policy, knowing when your coverage will begin is important.
Despite the waiting period, home warranties are a good investment for homeowners. Home warranty policies typically cost $300 to $600 a year, depending on coverage level and location. Coverage usually lasts for one year, although there are two and five-year options available on the market.
Unlike home insurance, home warranty policies do not cover accidents, fires, or property loss. However, when your water heater breaks down or the electrical system wears out, having home warranty coverage can save you a lot of money on repair and replacement costs.
Learn more about why home warranties use waiting periods and what you can do if something goes wrong while you’re waiting for coverage to start.
Understanding home warranties
A home warranty is a specific type of insurance policy that covers damages to your home’s major systems and appliances. Unlike a home insurance policy, warranties only typically cover natural wear and tear damages.
Home warranties are available when you first buy a home (for the most part), and most warranties offer coverage for the first year or two of homeownership. You can also add home warranty coverage to a property you already own, and you can choose to extend coverage.
Warranties typically cover the major systems in your home, including the electrical systems and wiring, HVAC systems, interior plumbing, and the water heater. Some appliances, like the air conditioner, dishwasher, and refrigerator, may also be covered. Some home warranty companies can have a serviceperson at your home the same day to assess the damage and determine whether the item needs to be repaired or replaced.
Your home warranty coverage typically includes repair and replacement costs for damages to covered items through normal use. If your water heater fails six months after you move into your home, you would file the claim with your home warranty provider. However, if your roof was damaged in a hailstorm, that’s the kind of claim you would file under home insurance. If the copper pipes in your plumbing system were stolen, that also falls under home insurance.
Read your home warranty policy carefully to understand which items in your home are covered and how much of the repair or replacement costs will be handled by your home warranty provider.
What is a waiting period?
Most home warranty providers include a mandatory waiting period in their policies. You’ll have to wait a specific amount of time before you can schedule a service call for your home. Depending on what kind of plan you enroll in, you’ll typically need to wait 30 to 60 days before you can use your home warranty.
You may wonder why home warranties have a waiting period in the first place. Waiting periods ultimately help discourage fraudulent claims. That way, the home warranty company can provide services to clients who really need them. Since home warranties are usually purchased when buying a home, the waiting period also discourages people from misusing the home warranty policy to replace appliances or systems with pre-existing damages. If you had a home inspection, you should already be aware of any repairs you’ll need to make to the property.
Why do home warranties have waiting periods?
By using a waiting period, the home warranty company is trying to protect itself from paying out more money when you’ve already saved some on the final sale. Items with pre-existing conditions typically aren’t covered under a home warranty. This might seem inconvenient, especially if the refrigerator breaks down two weeks after you move into a new home. However, trustworthy home warranty companies usually offer a 10- to 30-day waiting period.
If you’re shopping for home warranties and find one without a waiting period, it’s probably too good to be true. Your coverage might start right away, but you could end up sacrificing quality of service.
However, there are some exceptions to the rule. If you’re buying a new house and a home warranty at the same time, your warranty coverage may start as soon as your closing day. This discourages the seller from damaging systems and appliances before you move in and helps you save money if something does go wrong during your first week in your new home. If you’re buying a home warranty policy for an existing property, the home warranty company is more likely to require a waiting period.
The warranty company wants to protect itself from unnecessary claims. The waiting period also helps ensure that the damage is caused by normal wear and tear rather than misuse or – in some fraudulent cases – deliberate damage.
How to navigate waiting periods
What do you do in the meantime before the waiting period ends? If you bought a new home with existing problems, schedule repairs. Remember, most home warranties don’t cover pre-existing conditions anyway.
Use your home inspection report to set a budget for any potential issues. Your home inspector should provide a detailed list of any problems they found in the home. The inspection report is a useful guide to the ins and outs of your property.
If you already own the home and are looking to add home warranty coverage, continue with routine maintenance items. The pre-existing condition exclusion typically applies here as well. The home warranty can protect against any future issues, but you’ll be responsible for repair and replacement costs during the waiting period.
When your coverage becomes effective, you’ll be able to call the warranty company to schedule an appointment with a service person. The warranty provider will send someone out to assess the issue. From there, they’ll determine if they can repair the problem or if an appliance needs to be replaced.
Read your home warranty policy carefully in order to understand your coverage. By knowing your waiting period, you’ll enjoy the full benefits of your home warranty policy. Remember that not all items are fully covered by a home warranty, but a home warranty policy can save you a decent chunk of change at the end of the day.
Common misconceptions about home warranty waiting periods
Though some companies offer coverage immediately upon closing, most typically enforce some kind of waiting period. Some warranty companies will still send out a service provider during this time, but you’ll be responsible for service fees and replacement costs.
If your closing date differs from the occupancy date, the property may be vacant, meaning there’s less of a chance of things breaking during the first half of the waiting period. In this case, you’ll only be on the hook for repair costs if something goes wrong the first two weeks after occupancy begins. However, it’s still possible that something will break when the property is vacant, leading to a big mess and headache on move-in day. If possible, check in on your new property before you move in, especially if the sellers are already out of the house.
Understanding the home warranty waiting period helps you take full advantage of your coverage. Some waiting periods are split up. Coverage for appliances may begin a few days sooner than coverage for home systems. Make sure you know exactly when your coverage activates for all of the major systems and appliances in your home.
Read through your policy carefully and ask all your questions upfront. A good home warranty provider wants you to fully understand your new home warranty policy. You’ll need to know what items are covered, which exclusions may apply, and how long your coverage will last. Investing in a home warranty policy can save you thousands of dollars in repair and replacement costs down the road. Ask your home warranty provider about their waiting period policies.
Knowing your specific home warranty policy can help you determine when to file a claim with your provider and which situations need to be handled by home insurance. Reading and understanding your home warranty policy can save you some headaches down the road. In the meantime, keeping up with routine maintenance and budgeting for repairs based on the inspection report are important steps to help protect your biggest investment.
If you are a homeowner or are planning to buy a home, consider adding a home warranty to your to-do list. It’s a financial safety net that can shield you from unforeseen expenses related to your home’s systems and components.
