What is an Extended Home Warranty?

An extended home warranty is a service plan to help a homeowner cover the costs of certain types of replacements and repairs to a home within a set time period. The extension indicates lengthier coverage than a basic home warranty, such as an extension from three to five years. When people buy a home warranty, usually with the purchase of a home, they can opt for a regular or extended option, depending on what they predict their needs will be. The extended warranty offers more coverage, but is also more expensive.

Home warranties usually cover replacement of specific appliances and systems, like plumbing and water heaters. The homeowner will have to pay a service fee when a technician comes out to inspect and replace the defective or damaged component, and the warranty company can decline to provide coverage for problems caused by negligence. People critical of home warranties argue that many plans provide poor coverage and may not have a mechanism in place for providing services if the parent company fails. Proponents of home warranties claim they can help people cover unexpected expenses in the first few years of home ownership.

The extended home warranty will clearly name covered and excluded appliances and conditions. People may be able to buy a rider to cover excluded appliances. While comparing and contrasting warranty plans, people may want to consider what is covered in each plan and the size of the premium. A big premium may be acceptable if the extended home warranty is comprehensive, but in other cases, people might spend more on premiums than they would on repairs for most items, making the purchase more dubious.

Real estate agents may offer a home warranty as part of a service package when working with clients. At the time the warranty is purchased, the client can ask about extended home warranty products and expand the coverage, if desired. Real estate agents often have a recommendation for a specific warranty company, based on their experience with the companies offering services in a given location. Clients should be careful about accepting recommendations, however, as the agent may have a financial interest in a given company.

When evaluating an extended home warranty, a home owner can look at the time period covered and what is covered during that period. Some warranties may exclude certain appliances after a set period of time on the grounds that they do not want to be responsible for items that have simply lived out their natural life. It is also important to pay attention to how the warranty provider handles service calls. People may have to get preapproval before calling a technician and could be required to use the warranty company's service partners.