How do residential service contracts work?
Homeowners simply call the Residential Service Contract company when a problem occurs. A licensed contractor is dispatched to evaluate the problem. Since contracts vary, including cost, service fee, and types of coverage, TWA encourages consumers to carefully review them and select the plan best suited to their specific needs.
It is also important to emphasize that Residential Service Contracts cover systems and appliances that malfunction as a result of normal wear and tear. TWA stresses the importance of reviewing your contract for items excluded from coverage and reading the limits of liability carefully.
What does a residential service contract do?
Typically, Residential Service Contracts cover specific operating systems and appliances for one year following the closing. Contracts provide for repair or replacement of covered items. Homeowners pay only a small trade service fee for each service call. Basic and optional coverages, limitations and exclusions may vary from company to company.
Contact a TWA member for details.
Covered systems and appliances generally include a home’s
- Air Conditioning
- Ceiling Fans
- Doorbell & Smoke Detector
- Heating
- Electrical Systems
- Kitchen Appliances (including range, oven, dishwasher,
- and disposal)
- Plumbing Systems
- Trash Compactor
- Water Heaters
Optional Coverage
- Garage Door Openers
- Washer / Dryer
- Refrigerator
- Pool / Spa Equipment
- Well Pumps
- Solar Components
- Roof (limited)
- Lawn Sprinkler System
- Plumbing Stoppages
- Septic System
- Washer/Dryer
- Sub-Zero Refrigerator
- Kitchen Refrigerator (some companies include in basic coverage)
New Home Buyer? Ask about "New Construction Residential Service Contracts" offered by some of our members!
NOTE: Residential Service Contracts vary from company to company. Please review the contract carefully for specific coverages, exclusions and limitations.
Distinguishing between Homeowners Insurance and Home Warranties
Home warranties are residential service contracts between the company and the homeowner whereby the company agrees to repair or replace all or part of specified components, systems or appliances that fail due to normal wear and tear.
By law, the home warranty company cannot provide protection for the consequential or secondary damages caused by a covered failure. An example of this distinction would be a water heater inside a home bursts. The warranty company will dispatch a contractor to replace the water heater. But, if water damage occurred to the rugs, floors and /or furniture because of the burst water heater, that damage would not be covered by the warranty plan. It might, depending on how the homeowner's liability insurance policy is written, be covered by that type of insurance.
Home warranty plans do not indemnify losses, they repair or replace specified items in the home.