A home warranty is a service contract, and the paperwork behind it matters more than the summary a salesperson walks you through. The quote is usually a short description of what the plan appears to include. The contract is the full set of promises, limits, and exclusions. Before you pay, it helps to know what to look for in each document and which questions to ask the seller in writing.
Start with the obligor
The obligor is the party legally responsible for paying covered claims under the contract. It may be the company whose name is on the marketing, a separate insurer, or a related entity. The contract should name the obligor clearly. If the name on the quote differs from the name on the contract, ask which entity will actually pay and how you can reach it if a claim is disputed.
Read the definitions and the exclusions
Contracts define key words such as covered system, wear and tear, and pre-existing condition. A system that looks covered in a brochure may be limited by a definition deeper in the document. Read the exclusions list with the same care as the covered list. Pay attention to items that require special approval, items limited to a set age or condition, and any language about maintenance records.
Check the limits and charges
The service call fee is the amount charged each time a technician visits to assess or repair a claim. The annual cap is the most the company will pay toward covered claims in one contract year. Look for both in the contract itself, not only in the quote, and confirm how each one applies when the same item fails more than once.
Cancellation and transfer
Cancellation rules tell you how you can end the contract and whether any refund is available. Many contracts calculate a refund for the unused portion of the term, but they may subtract the cost of claims already paid. Ask for the formula in writing. Transfer rules matter when you sell the home. Check whether the contract can move to the new owner, whether the buyer must pay a transfer charge, and how long the transfer takes. These answers affect your sale as much as your coverage.
Questions to put in writing
Ask the seller to send the full contract before you pay. Then ask who the obligor is, how the waiting period applies to each system, what the service call fee covers, how the annual cap resets, how cancellation refunds are calculated, and whether the contract transfers to a buyer. Keep the answers with the contract. A written answer is far more useful later than a verbal one.
Compare before you commit
If you want to see sample language before you buy, this site lists home warranty companies that publish a sample contract. For the methodology behind the site's own comparisons, see how The Home Coverage Report scores companies. Reading the contract is not a substitute for advice from your attorney or your insurance agent, but it gives you the questions to bring to them.