The Legal Aspects of Home Warranty in the US


A home warranty will provide you with peace of mind, especially knowing that the financial burdens will be easier to manage since your appliances and systems are covered. Whether it is your heating system or your refrigerator, when it breaks down, when you purchase a home warranty policy, someone will have it fixed.

Still contemplating or whether you need a home warranty or not? Read the rest of this post and we’ll help you to be informed. Below, we will explore the legal aspects of home warranty. It will provide valuable insights to help you come up with the right decision.

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The Coverage of a Home Warranty

This will largely depend on the policy that you will purchase, as well as the terms and conditions that have been specified by the service provider. From a legal perspective, however, the basic home warranty must cover the main systems, including heating and cooling systems, as well as major appliances, such as refrigerator, television, microwave, and dishwasher. An additional payment may be required if you want to cover systems and appliances that are not included in the policy.

In most instances, the more extensive the coverage is, the more expensive will be the price of the home warranty. If you only want basic coverage, you can find lots of options that are easy on the wallet, although you have to be aware that the coverage will be limited.

The Limitations of a Home Warranty

Before you affix your signature in the contract, take the time to read the fine prints, which will let you know the limitations. Companies are required by law to state these limitations in the contract, which will inform the clients before they decide to choose one provider over the other.

The limits of the home warranty will identify the maximum amount that will be covered by the company, so this does not mean that the sky is the limit when it comes to the expenses that the provider will incur. This means that once a certain amount has been reached, the company will no longer pay for the repair. The remaining amount will be shouldered out of your personal pocket.

There are also non-monetary limits that can be specified on the contract. For instance, it is possible that there will be limitations on the number of times a repair or maintenance work will be executed.

When a Home Warranty is Invalid

The company has the right to refuse repair under certain circumstances when the warranty is deemed invalid. Among others, this could be when the period of the coverage has already expired. With this, be sure to check when you signed the contract and when it is set to expire to minimize frustration.

To add, the home warranty will also be invalid when there is negligence on your part. Meaning, when you fail to exercise due diligence in the care and maintenance of the system or appliance, the company has the right to refuse your claim. If you misuse the appliance or if it has been intentionally damaged, the company has every legal right to not have it repaired.

It is also important to note that new home improvements can render the warranty void. So, be sure to check the specifics before carrying out any major work in your place to make sure that the systems and appliances will still be covered by existing policy.

Different States, Different Laws

Before we end this post, allow us to point out that in the United States, there are no national laws that govern home warranties. Rather, you should expect that different states will have their individual laws, so it is best to do your research before you get settled with a policy of choice.

For instance, in New Jersey, the law requires home builders to provide a home warranty to anyone who is purchasing a new house. According to the Department of Community Affairs of New Jersey, this initial warranty has a duration of ten years. This is one thing that can provide new homeowners with peace of mind. Although, this can also mean that the properties will be more expensive as the financial burden will be logically passed to the buyer.

More so, in states like Texas, New York, and Florida, there are regulations that exist for home warranties, which are great for consumer protection. In Florida, the agency responsible for home warranties is the Florida Office of Insurance Regulation. On the other hand, in Texas, it is handled by the Texas Real State Commission. In New York, it is under the Department of Financial Services. This will provide you with the confidence that your money will not go into waste. With this, the government will be involved in determining the coverage and limits of the home warranty, making sure that both parties will not end up being aggravated.

On a national scale, the organization that is actively involved in home warranties in the U.S. is The National Home Service Contract Association. It provides Code of Ethics for home warranties.

However, the sad news is that at the federal level, there is not enough protection for homeowners when it comes to warranties. There is no proper regulation that can provide homeowners with peace of mind, increasing the chances of being scammed. What this means is that you have to be more meticulous in your search process to have an assurance that you will pick the right provider of a home warranty.

Wrap Up

Indeed, a home warranty can be beneficial in more ways than one. It helps you to be protected from financial burden in case an appliance or a system malfunction. However, this is not an all-encompassing solution. It is important to be aware of its legal aspects so that you will know your rights and avoid frustration!


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