What Is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of certain home systems and appliances, such as heating, plumbing, electrical systems, and major appliances, when they break down from normal wear and tear. It usually involves an annual fee plus a service fee for each repair call.
Home Warranty vs. Homeowners Insurance
Homeowners insurance covers damage from events such as fire or storms; a home warranty covers breakdowns from age and use.
Limits
Contracts typically have coverage caps and exclusions, so the terms determine what is actually paid.
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🔗 Related Terms
More Home Buying Terms
- Adjustable-Rate Mortgage (ARM)
- Appraisal Gap
- Assessed Value
- Bridge Loan
- Cash-Out Refinance
- Closing Disclosure
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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.