What is a residential service contract?

In this article: How it works | what covers | What it does not cover | for whom | Who is not for him? | bottom line | questions and answers

A residential service contract, also known as a home warranty, covers repair and replacement costs for major systems and appliances in your home. However, not all of these contracts are the same, as many differ in the elements that protect them.

Keep reading to learn more about how it works, how much it costs, and Best Home Service Contract Providers.

How does a residential service contract work?

Homeowners buy residential service contracts to protect their bank accounts from expensive home repairs and replacements due to daily wear and tear. A home warranty is not the same type of service agreement as home insurance or a manufacturer’s warranty policy.

Homeowners insurance covers the cost of structural damage to your home after a natural disaster or other covered peril. Manufacturer warranties cover any defects in a single device or system during the first few years of ownership.

Once you have purchased a residential service contract from the service provider, the waiting period (during which you cannot file a claim) begins. This delay in coverage usually lasts for 30 days. Once the waiting period is over, you can file a claim online or by phone any time you notice a problem with a covered item.

A checked contractor will come to your home to diagnose the problem and schedule a repair or replacement appointment. At this time, you’ll owe a small discount, known as a service fee.

What does the residential service contract cover?

Most residential service contracts cover hardware, systems, or both. Additionally, most plans offer optional add-ons that protect other items that may not fall into any category.


Household appliances help you with everyday tasks, such as washing dishes and doing laundry. Here are some of the major appliances covered by most residential service agreements:

  • Built-in food centers
  • Built-in microwave
  • clothes dryers
  • washing machines
  • dishwashers
  • Free standing ice makers
  • garage door openers
  • Ovens, stoves and ranges
  • refrigerators
  • garbage compactors


Essential home systems keep your home running and comfortable. Take a look at some of the most common systems covered by a home warranty plan:

  • air conditioning systems
  • Central Vacuums
  • electrical systems
  • garbage disposal
  • heating systems
  • instant water dispensers
  • plumbing systems
  • smoke detectors
  • water heaters


To complete your coverage, most home warranty companies offer optional extras. Here is a list of some of the more popular options:

  • electronics
  • guest units
  • Limited leakage in the roof
  • pest control services
  • Swimming pools and spas
  • Key Return Services
  • Secondary devices and systems
  • Sewage tanks and pumps
  • well pumps

What does the residential service contract not cover?

While most residential service contracts provide coverage for a variety of items, there are some exceptions. These policies usually do not cover:

  • Misuse of the device or system
  • Devices or systems with pre-existing conditions
  • Cosmetic damage, such as chips and scratches
  • Damage caused by improper installation or maintenance

Many homeowners complain that the exclusions of a home warranty contract can be vague. Make sure you get the coverage you need by reading the fine print on the contract form to find out what is and isn’t covered before you sign your own contract.

Do I need a residential service contract?

Some clients don’t see much return from home warranty protection. However, for most homeowners, a The home guarantee is worth itespecially if:

  • You are buying a home for the first time without knowing the device or system.
  • You don’t have a large emergency fund.
  • You do not know trusted service technicians.
  • You own an old home with outdated appliances and systems.
  • You want your home to be more attractive to potential buyers.

When should I purchase a residential service contract?

There is no good time to purchase a residential service contract; You can purchase a plan whenever you need device or system coverage. However, most homeowners, especially first-time homeowners, get coverage soon after purchasing their home. Your new home may come with a policy if the seller or real estate agent includes it in the contract.

Why should I not get a residential service contract?

A home warranty may not help you if you own a home with DIY or manufacturer coverage. Another scenario where it may not make sense to purchase a residential service contract is if you have a large emergency fund that can cover the cost of expensive repairs and replacements.

How do I choose a residential service provider?

If you decide to purchase a residential service contract, it’s time to consider the following factors to find a provider:

  • coverage: Each plan and provider covers different devices and systems. Write down the items you want to protect in your home, and set the policy accordingly.
  • costSelect a plan that fits your budget. While a home warranty costs between $38.73 and $63.16 per month, Many service providers allow customers to adjust this price by choosing their own service fee. For example, if you choose the highest service fee for your provider, your monthly premium will be lower.
  • Customer serviceCustomer service can make or break the value of your contract. If a device or platform in your home malfunctions, your service provider should dispatch a service technician immediately. Top providers offer 24/7 customer service online and over the phone.
  • reputationA residential services company’s online reputation can tell a lot about its coverage and customer service. Read customer reviews from Better Business Bureau, Trustpilot, and similar sites to understand a home warranty company.

If you are looking for the best comprehensive home warranty provider, the Home Media reviews team recommends it american house shield. This provider’s solid reputation, fast claims process, and comprehensive coverage make it a reliable choice for homeowners who want to protect their systems and devices.

bottom line

Residential service contracts are beneficial to many homeowners, especially new buyers with little experience in maintaining systems or appliances. This coverage gives them peace of mind that if an item fails, they are protected from expensive costs.

Before you choose a residential service contract, get quotes from several providers to compare coverage, cost, and availability. To help you get started, we recommend american house shield And the Liberty Home Guard. Both offer comprehensive plans that keep your devices and systems protected.

Frequently asked questions about residential service contracts

Methodology: Our ranking system for the best home insurance companies

Our clients rely on us to provide objective and accurate information – as such, we create a comprehensive rating system to craft our ratings for the best home warranty companies. This system represents a wide range of rating factors, and we collect data on dozens of home warranty providers to rank companies on each factor. The end result is a cumulative score for each provider – the companies that score the most points top the list.

To make sure our research is as accurate as possible, we contact each major home warranty provider directly and speak with representatives to obtain quotes, details of coverage options, availability based on location, and additional information. We also review contract templates to better understand what each plan covers and to identify limitations. In addition, we simulate the process of reaching out to each company’s customer service team to assess their level of assistance and problem-solving ability.

Once all relevant data is collected, we use the following scoring system to rate each home warranty company on a 100-point scale, then convert the result into a 5-star rating:

  • Comprehensive plan options (25 points): Companies that offer a variety of plan options are more likely to meet consumers’ needs. Thus, we award more points to providers that offer more plans and greater flexibility.
  • Cost (25 points): Both the monthly fee and the service fee are taken into account. The lower the fee, the higher the score.
  • Confidence (25 points): We analyze customer feedback on external review sites to gauge the reputation of each company. We deduct points for companies that are currently or have recently had civil lawsuits.
  • Customer Service (10 points): We base this factor on the responsiveness, kindness and helpfulness of the company’s customer service team.
  • Status Availability (5 points): Most home warranty companies do not serve all 50 US states. Providers that provide service in most states receive the highest rank in this category.
  • Additional advantages (5 points): Promotions and discounts are among the perks that can make home security more attractive to consumers. Companies that offer advantages that competitors do not get more points.
  • Coverage details (5 points): While the total number of plan options is important, it is also necessary to consider what each plan covers. The more comprehensive the coverage, the better.