You look for them when you buy new electronics or appliances, but what about when you purchase a home? Likely the largest purchase you’ll make in your lifetime, buying a home brings with it a lot more costs than just the price you see on the listing. Replacing and maintaining systems, appliances and fixtures can easily cost you thousands of dollars. What’s worse, the expenses will likely catch you off guard. Instead of stressing about the unknown, take the time to learn more about home warranties and how they can help protect you and your budget.

What Is A Home Warranty?

A home warranty provides a form of financial protection to buyers who may be concerned about potential costly repairs after the sale of the home closes. To put it simply, it’s a 1-year service contract between the homeowner and a home warranty company that covers repairs and replacements of most major home appliances and system components due to failure, standard usage or other problems.

How Do Home Warranties Work?

Home warranty companies have agreements with approved service providers. When something that’s covered by a home warranty breaks down, the homeowner calls the home warranty company, which sends one of its service providers to examine the problem. If the provider determines that the needed repair or replacement is covered by the warranty, they complete the work. The homeowner only pays a small service fee, plus the money already spent to purchase the warranty.

Most home warranty plans have a basic option that provides all homeowners who purchase a policy with certain coverage. It’s then up to the homeowners to purchase one or more optional components that will provide them with additional coverage at additional cost.

Are Home Warranties Required?

In Alberta, British Columbia, Ontario and Quebec, builders must provide home buyers with a third-party warranty. Everywhere else in Canada, the decision is up to the home buyer. Keep in mind that any members of the Canadian Home Builders’ Association are required to offer a warranty as a condition of their membership.

In some cases, the seller may offer to purchase a home warranty on the buyer’s behalf to provide peace of mind that any component of the home can be fixed affordably after the sale closes.

What’s The Difference Between Home Warranties And Home Insurance?

Many homeowners don’t realize that home warranties are different than home insurance. A home warranty focuses on the day-to-day issues that can arise in any home and will cover the costs associated with covered appliances and systems breaking down. Home insurance offers a bigger picture option that protects your home and all of its contents from loss or damage due to theft, fire, water damage etc. but won’t help with individual appliance issues or system breakdowns.

What Do Home Warranties Cover?

A typical home warranty will cover most major components of large home systems like your hot water heaters, HVAC, electrical, plumbing etc. It may also provide coverage for appliances or give you the option to add on extra coverage for things like swimming pools or an at-home spa.

If you’re buying a new build, make sure you ask your builder about their warranty before you sign any contracts so you can learn more about what’s covered and for how long.


Not all home warranties will provide coverage for appliances as part of their basic package so be sure to inquire in advance if this is something you foresee needing. If you choose to add on an appliance package, it will typically cover a specific number of home appliances like fridges, stoves, washers, dryers, dishwashers and microwaves.

Electrical, HVAC & Plumbing

Your electrical, plumbing and HVAC will likely each be considered a “system” when it comes to coverage. These would all fall under plans that offer coverage for a certain number of systems in your home so be sure you know how many are covered, versus how many you need coverage for, in advance. Sometimes combo plans will be available that let you mix and match appliances and systems so you can customize a plan that works best based on which specific items you need coverage for.

Add-On Coverage

Add-on coverage is often available for items that aren’t included under the appliance or systems categories. These items could include pools, saunas, hot tubs or even additional appliances should you require it. If you know you’ll have at least one of these items categorized as add-ons, be sure to inquire about the cost to cover it in advance so you aren’t surprised by any additional fees once you lock in.

Costs Of Purchasing A Home Warranty

The price of a home warranty will fluctuate depending on the property type (condo, duplex, townhouse, single-family detached) and whether you purchase basic or extended coverage. It’s likely to cost you several hundred dollars each year which is either due upfront or can be put on a payment plan if the company offers that.

You’ll also want to make note that home warranties will charge a service call fee of about $75 – $125 each time the warranty holder has to request that a service provider visit your home for an issue. If that issue requires multiple visits, the homeowner may be on the hook to pay each time the service provider returns.

Keep in mind that having a home warranty doesn’t mean you’ll never have to spend money on any repairs. Claims aren’t always guaranteed to be approved and they won’t cover anything that hasn’t been properly maintained over time.

How Long Do Home Warranties Last?

The majority of home warranty terms are one year in duration. This is typically a 12-month renewable contract from year to year. Should you choose to pursue a home warranty, it’s important that you renew and pay promptly so you don’t have to worry about a lapse in coverage.

Can Home Warranties Help Sell My Home?

As you probably know, buying a home can be stressful and the costs tend to add up faster that you expect. The current state of the real estate market may have some buyers feeling anxious or unsure about pulling the trigger on a home, especially if they’re unable to get a home inspection for fear of losing out because of conditions. Offering a home warranty to potential buyers can definitely make the sale more enticing and give them some extra peace of mind knowing they’ll be covered should any issues arise after closing.

A home warranty may not be the perfect solution, but it could be a good fit for your personal situation. It not only helps you protect the biggest investment you’ll make in your lifetime, it also helps you financially prepare for unexpected situations that may arise while you own your home. As with anything else, it’s important to do your homework and reach out to an industry professional to discuss your options when it comes to protecting your home and its contents by means of warranty or insurance.