Q: We’re looking at a home with some older appliances, and the home inspector recommended we think about a home warranty. The biggest worry is the HVAC system in the house—it’s well maintained, but probably getting near the end of its lifespan. Do home warranties cover HVAC? And are home warranties worth it for HVAC repair?
A: It’s great that your home inspector is giving you such direct and specific feedback about the condition of the appliances and systems in your home; that kind of information makes it much easier to buy with the confidence that you’re making a good investment. Aging appliances are a real concern to many home buyers because after sinking a big chunk of their savings into the home purchase and furnishing, they don’t necessarily have an emergency fund built up immediately to support repairing or replacing appliances and systems. In cases like yours, a home warranty is a great, relatively inexpensive way to make sure you’ll be able to cover repairs and replacements of appliances and systems during the policy period—as long as you read the warranty documents carefully and know what’s covered. With some exceptions, HVAC systems are usually covered by home warranties that include home systems.
Typically, most components of an HVAC system are covered by a home warranty.
Home warranties are designed to cover maintenance and repair of normal wear and tear and age-related failures of covered systems and appliances. In other words, they cover what homeowners insurance policies do not, as homeowners insurance focuses on repairing damage caused by accidents, weather, fire, or other outside forces. Which systems your warranty will cover depends on the type of warranty you choose; most warranty companies offer policies that cover appliances only (including kitchen and laundry appliances), systems only (including whole home systems like electrical, plumbing, and HVAC), or combination policies that cover both. If you’re anticipating a need to cover the HVAC system, you’ll want to make sure you select a warranty package that includes it. Your policy will delineate which components are covered. Usually HVAC warranties include central air conditioning units, heating systems, some wall heaters, and water heaters. The best home warranty for HVAC will also cover ductwork and pipes, along with the components that run the systems such as thermostats. Home warranties will not generally cover portable appliances, so if you’re looking for air conditioner insurance for your window units, the warranty won’t include those.
How will a home warranty cover HVAC repairs? First, you’ll choose the warranty and purchase it, usually for 1 year and one annual premium. Read the contract: Some warranties include routine checkups or maintenance even if there’s not a problem, so if your policy covers that you’ll want to schedule a checkup promptly. Often small problems can be caught during routine cleanings and maintenance and then repaired before they become bigger problems. If you do have a problem or your HVAC stops functioning properly, you’ll reach out to your warranty company by phone or through its online portal to file a claim. The warranty company will either send a technician to evaluate the situation or tell you that you can select the contractor of your choice to do so. You’ll pay a flat service visit charge (the amount of this charge is in your contract and will not change), and the technician will evaluate the problem and perform appropriate repairs, all included in your flat service visit charge. If the technician determines that the system has failed and cannot be repaired, they will recommend replacing the system with a new system of equal power and value (though some companies offer customers the option to upgrade from their old system if they’re willing to pay the difference). The replacement will be covered by the warranty up to the limit of your coverage.
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Home warranty companies will often decide who performs maintenance or repairs on your HVAC system, or when a component really needs to be replaced.
One thing that is important to note in your contract: Carrying a warranty doesn’t create a free-for-all situation where you can call your local contractor for repairs and decide yourself that something needs to be replaced. The flexibility to choose your own technician or contractor depends on the terms of your warranty. Some companies offer customers the freedom to select who they’d prefer to work with, while others will assign a technician to come check out your system from a group of approved companies they’ve chosen to work with. This can keep costs down for them and ensure that the technicians are using the warranty company’s prescribed standards for covered maintenance in the repair vs. replacement decision. If you are allowed to select your own technician, the work will still be subject to the warranty company’s coverage maximums for the work that needs to be completed.
Once the technician is at your home, they will spend time examining the components and the system and provide the maintenance and repairs that are necessary. The decision to replace rather than repair any part or system rests with the technician and the standards the warranty company has set. They have complex formulas that balance the cost of the parts and repair against the age and condition of the appliance or system, and they’ll make the decision based on what makes the most sense for the function of the system and the cost.
An HVAC home warranty plan won’t cover all scenarios.
While your home warranty will cover most maintenance and replacements of systems and appliances, there are some exclusions, and the exclusions can be especially frustrating for new homeowners. Many home warranty companies, even the best home warranty companies, have a waiting period between the date the policy is signed and the date it takes effect. This is to prevent homeowners from waiting until they need a massive repair, or know that a system is about to fail, before purchasing a warranty. This protects warranty companies from having to pay out thousands of dollars for claims that are not made in good faith, but it can also mean that problems that occur during the grace period may not be covered. In addition, problems that existed before the warranty took effect may not be covered; if the technician can tell that the ducts haven’t been cleaned in years, causing the fans to work too hard and prematurely ruining the furnace, the warranty claim may be denied.
Also, home warranties typically do not cover damage or failures that are the result of anything other than age or normal wear and tear. If a pipe bursts in the basement and destroys your dryer, the warranty won’t replace the dryer—but your homeowners insurance, which covers damage, most likely will after you’ve paid your deductible. If your HVAC system fails because it shorts out during an electrical storm, your homeowners insurance may also cover that—but your warranty likely won’t.
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Regular HVAC maintenance can keep your system running smoothly, but your home warranty coverage may also depend on it.
These policies are designed to cover age-related wear and tear, but they assume that basic maintenance has been done and that the appliance or system hasn’t been neglected. If the technician arrives and determines that the whole system has blown out because the filter has never been changed or the ducts have never been cleaned, the failure may not be covered as it is the result of negligence, not normal wear and tear. It’s a good idea to request receipts and any maintenance documentation from the sellers if you’re buying a new home, or to hang on to your own records so that you can demonstrate that basic maintenance has been done to support your warranty claims. If you’re trying to determine how to get your home warranty to replace AC units or a boiler, being able to show that you took good care of the system before it failed will go a long way toward success.
Once you have the warranty, it’s easier to budget for routine maintenance and immediate repairs that will extend the life of your HVAC system. In fact, regular maintenance is the best way to prolong your HVAC system’s lifespan, whether that means the maintenance homeowners can do, like changing filters regularly and keeping thermostats dust-free, or annual cleaning and checkups to make sure everything is running smoothly. If your maintenance hasn’t quite been up to date thus far, start scheduling as soon as possible. Your air quality and HVAC will thank you, and your warranty will become a more useful tool.
A home warranty is worth getting for HVAC maintenance; in the long run, it’s typically more cost-effective.
When you’re buying a home, any additional costs at all can seem like the last straw. A home warranty is an additional up-front expense. But think forward: How much does a typical HVAC service call cost? It’s hard to say, because so much depends on what’s wrong, how much the parts will cost, how much time it will take to complete the repair, and what fees the technician will need to add on. Home warranties are not as expensive as you might think, though they vary based on what type of coverage you select. With set service call fees averaging between $75 and $125, you could save enough to cover the cost of the whole warranty in just a few visits. And if you need to have a covered system or appliance replaced, you’ll save significantly, as the cost of the replacement is covered by that service call fee. In fact, most homeowners pay between $3,699 and $7,152 to replace an air conditioning system.
In addition to establishing a set charge for repairs, a home warranty can save you money by making it feasible to call for repairs to small problems. If your air conditioner isn’t keeping your home as cool as you’re setting the thermostat, you might brush it off, thinking it’s just a few degrees and it’s not worth the price of calling a contractor. That small problem, unaddressed, can turn into a big problem that will be far more expensive to repair. Knowing that your service call fee is set in the home warranty contract, you can call for repairs confident that you can fit it into your budget and have the problem corrected before it can blossom.
Over time, the amount you invest up front and in service fees will be outweighed by the amount you save, especially if you use the warranty to its full extent.
Read the fine print on your home warranty plan to know what’s covered and what’s not.
Before signing any contract, you should make sure you know what commitment you’re making. This is especially important with home warranties. Because they only cover exactly what the contract specifies, it’s critical that you know what’s listed—and what isn’t. Read the fine print; study the exceptions, exclusions, and conditions; and be comfortable asking the agent assisting you for clarification where you need it. Often complaints about warranty coverage are the result of a customer being unhappy that something expensive wasn’t covered. The best HVAC warranty contract will tell you what you need to know to avoid this disappointment, so read carefully, and if something important isn’t covered you can shop around before committing.