By Adam Chubbuck, Team Leader, Team Alpha Charlie of Douglas Realty. Retired U.S. Navy Chief. Licensed in Maryland and Virginia.
Home warranties come up in nearly every transaction. A seller offers one as a concession, a buyer asks whether to request one, and almost nobody involved has actually read what the thing covers.
Here is the straight version.
It Is Not Insurance
Start here, because the names confuse people.
Homeowners insurance covers sudden, unexpected damage. Fire, storms, a tree through the roof, theft. It is required by your lender.
A home warranty is a service contract covering the repair or replacement of systems and appliances that break down from normal use. It is optional, and nobody requires it.
Different things. You need the first one. The second one is a decision.
What It Typically Covers
Plans vary enormously by company, which is the whole point of this article, but coverage usually centers on:
Systems. HVAC, electrical, plumbing, water heater, ductwork.
Appliances. Refrigerator, oven and range, dishwasher, built-in microwave, washer and dryer, garbage disposal.
Optional add-ons, usually for extra cost: pool and spa equipment, well pump, septic system, second refrigerator, roof leak coverage.
That last group matters in this county. Well and septic coverage is an add-on, not standard, and in Anne Arundel County a lot of properties have both.
What It Typically Does Not Cover
This is where people get frustrated.
Pre-existing conditions. If it was broken before the contract started, it is generally not covered. Some companies ask for an inspection or maintenance records.
Lack of maintenance. If a system failed because it was never serviced, expect a denial. Keep your service receipts.
Improper installation or code violations. If the prior work was done wrong, that is usually excluded.
Cosmetic issues. It covers function, not appearance.
The structure itself. Roof, foundation, windows, and walls are generally not covered, except for limited roof leak add-ons.
Code upgrades, permits, and disposal. Here is a real one. If your 1978 system fails and current code requires something different, the warranty may cover the equipment while you pay for the code compliance work. Ask specifically.
And know your caps. Most plans have per-item dollar limits and an annual aggregate. A covered HVAC replacement may hit the cap and leave you paying the difference.
How It Actually Works
You pay an annual premium. When something breaks, you file a claim and pay a service call fee, sometimes called a trade service fee, for the visit.
The warranty company sends their contractor. Not yours.
That is the part people react to most. You generally cannot call the person you trust and get reimbursed. You take the technician they dispatch, on their timeline.
And the company decides repair versus replace, not you. If they can repair it, they usually will.
Where It Shows Up in a Transaction
As a seller concession. A seller offers a one year warranty to reduce a buyer’s anxiety about older systems. It is a relatively inexpensive way to address a concern, and it is common in this market.
As a buyer request. Asking the seller to provide one is a normal negotiating item, and it is often easier to get than a repair.
For a seller while listed. Some companies offer coverage during the listing period, which can be useful if you are worried about a system failing while the house is on the market in the middle of winter.
Should You Get One?
It usually makes sense when:
- The home is older with original systems
- You do not have cash reserves for a surprise HVAC or water heater replacement
- You are a first-time buyer and the predictability is worth something
- The seller is paying for it, which is a free year of coverage
It usually does not make sense when:
- The systems are new and still under manufacturer warranty
- You have reserves and would rather self-insure
- You already have a contractor you trust and want to keep using them
- You have read the contract and the exclusions gut the value for your specific house
My honest view: for a buyer purchasing an older home with aging systems, especially when the seller pays, it is reasonable. For a newer home with warranties still in force, you are frequently paying for coverage you will not use.
Four Questions to Ask Before You Accept One
What exactly is covered, and what are the per-item caps? Get the actual contract, not the brochure.
How are pre-existing conditions handled? This is the most common denial and you want to know their standard before you need it.
Can I use my own contractor? Usually no, but ask. Some plans allow it under certain circumstances.
Does it cover my well and septic? If you are on private systems, this is almost always an add-on. Confirm it in writing.
The Thing That Matters More
A home warranty is not a substitute for a thorough inspection.
If a seller offers a warranty and you are tempted to go lighter on inspections, do not. The inspection tells you what you are buying. The warranty is a modest hedge on what happens afterward.
And if you are on well or septic, get those inspected separately regardless. Those are the expensive surprises in this county, and standard warranty coverage does not include them.
Questions About a Specific Offer?
If a warranty is on the table in your transaction and you want to know whether it is worth anything for your particular house, send me the plan details. I will tell you straight.
Reach out to Team Alpha Charlie of Douglas Realty.
Quick Answers
What is the difference between a home warranty and homeowners insurance?
Insurance covers sudden, unexpected damage like fire, storms, or theft, and your lender requires it. A home warranty is an optional service contract covering repair or replacement of systems and appliances that break down from normal use.
What does a home warranty usually cover?
Typically HVAC, electrical, plumbing, water heater, and ductwork, plus major appliances like the refrigerator, oven, dishwasher, and washer and dryer. Pool equipment, well pump, and septic coverage are usually optional add-ons at extra cost.
What does a home warranty not cover?
Commonly pre-existing conditions, failures caused by lack of maintenance, improper prior installation, cosmetic issues, and the structure itself including roof, foundation, and windows. Code upgrades and permit costs tied to a covered replacement are often excluded too.
Can I use my own contractor with a home warranty?
Usually not. The warranty company dispatches their own contractor on their timeline, and they decide whether to repair or replace. Ask the specific company, since some plans allow exceptions.
Is a home warranty worth it?
It depends on the house. It makes more sense on an older home with aging systems, for a buyer without reserves, and especially when the seller is paying. It makes less sense on a newer home where manufacturer warranties are still in force, or if you have reserves and a contractor you trust.
Does a home warranty cover well and septic?
Generally only as an optional add-on at additional cost, not as standard coverage. In Anne Arundel County, where many properties are on private systems, confirm this in writing before relying on it.
Home warranty coverage, exclusions, caps, service fees, and claim procedures vary significantly by company and plan. Review the actual contract rather than marketing materials before purchasing or accepting one. This is general information, not insurance or legal advice.
I am Adam Chubbuck, Team Leader of Team Alpha Charlie of Douglas Realty. Retired U.S. Navy Chief, licensed in Maryland and Virginia, and my team has sold in excess of 400 homes across the Baltimore to Annapolis corridor. Team Alpha Charlie is Zillow Preferred and serves buyers and sellers throughout Anne Arundel County, Howard County, Baltimore County, Baltimore City, and the surrounding markets, with deep experience supporting military, veteran, and Department of Defense families.
443-347-6692 | [email protected] | TACMD.com
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Adam Chubbuck
