Home warranty glossary

Service contract — the legal category this product belongs to. Federally defined as "a contract in writing to perform, over a fixed period of time or for a specified duration, services relating to the maintenance or repair (or both) of a consumer product." Home protection contract — California's statutory term for the same thing: a contract to "repair or replace all or any part of any component, system or appliance of a home necessitated by wear and tear, deterioration or inherent defect."

Service call fee (also trade call fee or deductible) — the per-visit charge, typically $75 to $125, generally payable whether or not the claim is approved. Coverage cap — a per-item dollar limit. Aggregate limit — the total the contract will pay across all claims in a term. Both convert "covered" into "covered up to."

Normal wear and tear — the failure mode these contracts are built around. If a failure is attributed to something else — abuse, improper installation, lack of maintenance, a manufacturing recall — it may fall outside. Pre-existing condition — a defect present before the contract began. Waiting period — a stretch after purchase during which claims are not accepted.

Covered component — the specific part of a system named in the contract; systems are frequently covered part-by-part rather than wholesale. Exclusion — anything the contract removes, by item or by cause. Cash in lieu — a cash offer instead of repair or replacement, usually calculated on the company's cost, not retail. That distinction is often the whole disagreement.

How to choose

'Covered' is never the full answer

Ask 'covered up to how much' and 'which components.' Those two questions defeat most sales pitches.

Understand cash in lieu before you accept it

It's usually based on the company's negotiated cost, not what you'd pay retail. Compare before agreeing.

Check the waiting period

Buying coverage while something is already failing generally doesn't work — waiting periods and pre-existing condition clauses both exist for that.

Look for 'covered component' language

A system can be listed as covered while the specific part that failed isn't.

Find the aggregate limit

One large claim can exhaust the year's coverage, leaving nothing for the next failure.