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Home Warranty vs. Service Agreements - What IS The Difference?


Home Warranty vs. Service Agreements - What IS The Difference?

When looking at the description of a service agreement or a home warranty, they can look extremely similar and make you wonder, “What IS the difference between these?” It’s a common question, but knowing the difference is important when choosing which one is the best fit for you and your home. Here we outline the differences between the two and the benefits of both.

Service Agreements

Service agreements cover repairs, both parts and labor, on all your major appliances and systems in your home. Parts and labor are included, but after the appliance fails and can no longer be repaired; it is the customer’s responsibility to replace the unit.

Much like a home warranty, service agreements can be tailored to your needs. Service agreements cover items such as:

  • Gas or electrical heating/air
  • Furnace Humidifier
  • Washer/dryer (electric or gas)
  • Refrigerator
  • Garbage Disposal
  • Dishwasher

There are different agreements to choose from when deciding which is best for your home. The agreements range from covering only a few appliances or all appliances in your home. There are also agreements specific for plumbing or only the heating and air conditioning systems and all are extremely cost efficient. The agreement with the most coverage costs about $30 per month or $360 per year. The agreement covering your basic heating and air conditioning costs around $20 per month or $240 per year. There are agreements in between and one for every homeowner’s needs.

Home Warranties  

Cars and smartphones aren’t the only items with a warranty as you can purchase one for your home, too. A home warranty is basically an agreement to provide repairs or a possible replacement on the major equipment and systems in your home.  When something covered by a home warranty breaks down, the homeowner calls for service.  If this is determined to be a covered service, the homeowner schedules our technician to the home.  The work is completed, whether it is a service repair or a replacement and the homeowner pays a small deductible.  In a nutshell, it is financial protection for your home.  These can come in “Traditional Home Warranties” or “New Construction Home Warranties.”

A home warranty can cover:

  • Electrical systems
  • Plumbing systems
  • Heating and cooling systems
  • Washer and dryer
  • Kitchen appliances (ovens, range, garbage disposal)

Basic home warranty coverage starts at about $450 plus tax or more depending on what you want covered. Most companies offer warranties which can be started at any time, but the best time to purchase a home warranty is the same time you purchase your home.

What do you get out of a home warranty? The benefits of having a home warranty is the reassurance that you can move in without having to pay out large amounts of extra money for repairs you weren’t expecting.

Homeowners with newly built homes can purchase home warranties, too.  You’re thinking, but, everything is new.  New equipment and appliances fail and need to be repaired.  There are agreements specific to new construction. Homeowners who are selling their house can include for the buyer and make their home look more appealing.

Whether you choose a service agreement or a home warranty, you will have peace of mind and know the appliances in your home are protected.

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