Sometimes there is confusion in the difference between a ‘home warranty’ and in ‘homeowner’s property insurance.’
A home warranty gives some protection, usually for a year, against breakage and malfunction of items in the home, such as the heat/air system, appliances, and sometimes plumbing.
Homeowner’s property insurance is insurance you are required to carry by your lender (and which you will want to carry even if you are a cash buyer and have no mortgage), which covers your property in the event of damage or destruction by fire, theft, tornados, and other disasters.
There are several home warranty companies, such as 2-10, HWA, Old Republic, First American, and others. Their representative will email you a booklet on what is covered for the various policies. The information is also online for some of the companies. Ask a friend or your Realtor® for other names or for a recommendation.
If you or the sellers buy a home warranty, you will get the information on your policy, such as policy number and toll free phone number to call if you have a question, at closing. If something breaks after you move into your home, the first thing to do is to call the toll free number and tell them your problem and see if the policy covers it. If your problem is covered, they will send one of their contracted service people to check it. You generally have to pay a trade call fee, usually in the range of $75-$100. If the problem is covered by the policy, they will schedule a time to fix, after ordering the needed part, if necessary.
If you call your own service person, they may diagnose the problem, but the home warranty company will not pay them. The home warranty company tells you whom to use.
If the seller does not agree to pay for the home warranty, and you don’t want to pay for one, your best bet is to reach out to your social networks, friends, and family, and see which service company has given them good service when you have a problem. Notice we said ‘when’ you have a problem, not ‘if.’ At some point ALL homes have something that needs servicing or repair.
A home warranty is not a fix-all for anything that goes wrong in the home. Just like with health insurance and car insurance, sometimes the problem is covered, and sometimes it is not. The best way to look at a home warranty is not as a guarantee, but a bonus if it pays.