Home warranty comparisons

Warranty vs insurance. These are different legal products. A home warranty is a service contract: federal law defines that as a written contract to perform maintenance or repair services over a fixed period. Insurance responds to perils. If a storm destroys your air conditioner, that's an insurance question. If it dies at fifteen years old, that's a warranty question — assuming it isn't excluded for age or condition.

Warranty vs manufacturer coverage. The FTC's rule draws the line at the "basis of the bargain": a written warranty comes with the product at no extra charge, while an agreement bought separately or for extra consideration is a service contract. If your appliances are new and still under manufacturer warranty, a home warranty on those same appliances is buying coverage you already have.

Warranty vs self-insuring. The math is straightforward. Premium $400 to $900 a year, plus $75 to $125 per service call, plus per-item caps that limit what the company pays, plus no choice of contractor. Against: the same money in a savings account, full choice of contractor, no exclusions, no caps, no arbitration clause. If you can absorb a $2,000 surprise, self-insuring usually wins on expected value.

Buyer vs seller coverage. In a real estate transaction, coverage is often presented as a seller concession. Somebody pays for it — in California, providing such a contract without charge violates the governing statute. Treat it as part of the negotiated price and ask what renewal costs.

How to choose

Don't buy a warranty expecting insurance behavior

Wear and tear versus sudden accidental damage. Different products, different documents, no overlap.

Check manufacturer coverage first

If the equipment is new and covered, you may be buying the same protection twice.

Run the self-insurance column honestly

$400 to $900 premium plus $75 to $125 per visit, every year, versus that money in an account you control.

Value contractor choice at something

Being routed to an assigned technician is a real cost if you already have trades you trust.

In a home sale, treat it as price

A warranty offered as a concession is money. Compare it to the same money off the purchase price.