What Is a Home Service Contract, or ‘Warranty?’

The National Home Service Contract Association (NHSCA) defines home service contracts, or “warranties,” as contracts offering repair, replacement or service for major appliances and systems that break down as a result of “normal” use. Home service contracts, according to the Association, are a significant means of savings for homeowners, with coverage ranging from disposals and ovens to HVAC systems.

“The wholesale value of these contracts easily exceeds $1 billion in savings to consumers annually,” said Mike Bartosch, president of the NHSCA, in a recent statement.

Home service contracts are not the same as homeowners insurance. Said Bartosch, “Home service contracts and homeowners insurance policies are mutually exclusive products in all 50 states. NHSCA members are not insurers and do not sell an insurance product. Further, insurance products don’t cover service, repairs or replacement to home systems and appliances required as a result of normal wear and use.

“If a system or appliance stops working, contact your home service contract provider,” Bartosch added in the statement. “If a home system or appliance is damaged by a falling tree, catches fire, or is subject to vandalism, contact your insurance agent.”

Real estate professionals often offer home service contracts—in this case, “warranties”—to homebuyers and/or sellers. The term “warranty,” according to the NHSCA, refers to the seller’s action of purchasing a service contract for the buyer should issues arise during the first year of ownership. 

Here in the Greater Denver Metro Area, I have recommended American Home Shield and Blue Ribbon Home Warranty to my clients. In addition to the monetary savings, these types of warranties provide peace of mind, especially when purchasing and/or selling a property with older appliances and systems. 

 
Source: National Home Service Contract Association (NHSCA)

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