Solved! Does a Home Warranty Cover Plumbing Systems?

Q: Recently, a pipe burst in my home, causing a lot of damage to my furniture and belongings. My homeowners insurance paid for the cleanup, but not the repair of the pipe, and said I should consider a home warranty. Would a home warranty have covered the cost of repairing the pipe?

A: In all likelihood, yes, home warranty coverage includes repairs to pipes and other plumbing fixtures. You’ve discovered the frustration that many people experience with homeowners insurance—those policies cover the cost of repairing and replacing items damaged by sudden events such as a burst pipe, but don’t cover the repair of the source of the problem. That’s because homeowners insurance is really insurance to preserve the value of the structure of your home, so the job of a homeowners policy is to fix damage. So how is a home warranty different? What is a home warranty, and what does a home warranty cover?

Typically, a home warranty will cover the cost of making repairs to interior plumbing.

Home warranties are service plans that charge an annual premium to pay for service, repair, and if necessary, replacement of systems and appliances listed in the policy. Warranties are offered in several configurations: some cover only the major home systems, such as HVAC, electrical, and plumbing, while others cover kitchen and laundry appliances. Combination warranties cover both systems and appliances, and you can add on other items such as basement refrigerators and spas for an extra cost. When a covered item or system needs repair or maintenance, you’ll make a call to the warranty company and pay a flat service charge that is specified in your contract, and a service person will complete the repair or replace the item if repair is impossible or impractical.

Plumbing is considered a whole-house service, so warranties that include systems will cover the cost of repairs to indoor pipes and plumbing. This can include leaks or breaks in the pipes, along with fixing or replacing faucets and valves, built-in motors and pumps, and basket strainers. In addition, warranties will cover the cleanout of tub, shower, and toilet blockages and stoppages.

Small plumbing problems—slow drains, slow drips or leaks, and rusting or stuck valves—are often repairs that homeowners put off, simply because there’s no telling how much a plumber’s bill will be once everything is opened up. Without a warranty, a plumber will charge their own “walk in the door” fee, then charge for labor by the hour, parts, materials, and disposal, which can mount up pretty quickly. Plus, as most of the plumbing is hidden behind the wall, there’s the mystery factor; if the plumber finds that the problem is deeper or more complex than you expected, costs can rise exponentially.

The problem is that when you put off repairing small problems, they can grow into big problems in a hurry—a slow drain becomes a blocked one, which puts pressure on an old, corroded joint you can’t see, and then turns into a major leak that you discover when the kitchen ceiling falls in under the weight of the water and damp plaster. If you’re wondering, “Are home warranties worth it?” this scenario should help answer your question: With a home warranty, the flat service charge is likely to be between $75 and $125. The plumber’s bill will be much higher.

However, a home warranty will not cover the cost of repairing the damage caused by leaky plumbing.

Because a home warranty is not actually plumbing insurance but is a contract for service, it isn’t designed to cover damage caused by plumbing failures. The purpose of the warranty is to bring the covered system back up to full function or replace it. That means that your soaked carpet, damaged tiles, sodden wallboard, and collapsed ceiling (not to mention the personal property destroyed by the giant puddle or mold) aren’t the responsibility of the warranty company and are excluded from your policy.

Damaged property and structural elements are the purview of your homeowners insurance, which is why homeowners insurance and a home warranty work so well together to completely protect you from the financial strain a system failure can cause. What does home warranty coverage do? It repairs the source of the damage. What does homeowners insurance do? It pays to return your home to the condition it was in before the failure. Together these two services will, after a deductible and a service charge, restore your home.

If the damage is due to wear and tear, the repairs are typically covered by the home warranty.

Often the term “warranty” refers to a manufacturer’s guarantee that their product will be free of defects for a certain period of time, and if the product fails or does appear to have a manufacturing defect, the manufacturer will replace the item. Those warranties, however, specifically exclude failures that result from age or normal wear and tear, which is where a home warranty is different—it is especially designed to cover damage caused by wear and tear or age, such as corrosion that weakens a pipe, internal blockages caused by seals wearing away, and similar problems.

Plumbing breakdowns caused by natural disasters or homeowner neglect are not typically covered by a home warranty.

On the other hand, warranties are not intended to cover damage that is caused by an outside force. If your pipes are damaged by an hail, collapsed roof, or a tree falling against the house during a storm—or really any disaster covered by homeowners insurance— the home warranty won’t cover the repair because the leak or breakage is a result of an outside force. That places the repair firmly into the responsibility of your homeowners policy.

Outdoor plumbing systems like lawn sprinklers are not typically covered by any default home warranty plan.

Usually, the home warranty coverage ends at the borders of the house. This means that sprinkler systems, along with spas and swimming pools, are not covered by home warranty policies unless the company who owns your warranty offers specialized line-item coverage for additional systems. Some companies will allow you to purchase this additional coverage, which may be well worth it if you have a lot of outdoor plumbing equipment.

Septic systems, though connected to the plumbing system, are not covered by a home warranty.

Most people don’t think of their septic system as being separate from their plumbing; it’s just another component that sometimes needs maintenance. And it’s certainly connected to your plumbing system, but it operates separately and requires a special technician to evaluate and repair. As a result, septic systems are not usually covered by a home warranty. Again, some companies offer separate service contracts for septic systems as add-on coverage for an additional cost, or you may be able to set up a service contract similar to a home warranty with a septic maintenance company.

The best home warranty companies do offer a range of add-on coverage for septic systems and outdoor plumbing systems. These add to the annual premium and may incur a different level of service charge from the amount you’re contracted for the rest of your home. As with any contract, it’s important to read the fine print. Most people who are dissatisfied with home warranty coverage are unhappy because of a detail they missed in their contract that took them by surprise in the heat of the moment.

Read your home warranty policy carefully to know when and how your plumbing system is covered.

Every policy is different, and so it is very, very important to read the contract closely before purchasing a home warranty. The contract will include important information, such as the term of the policy (how long your coverage will last), the premium you’ll pay, and the rate of the service charge.

Your policy will explain coverage limits, too. Most covered events have a maximum dollar figure that the warranty will cover, and/or a limit to how many visits constitute one event. As well, most policies have an overall annual maximum. Your policy will tell you what this is and how to check what the remaining balance is.

The contract will also spell out exactly what is covered and what is not. Unlike homeowners policies, which cover a wide range of losses, unless specifically excluded, home warranties only cover exactly what the policy lists. So if it lists one refrigerator, your main refrigerator is covered—but the spare in the garage is not. If hot tubs, spas, and pools are not listed, they’re not covered. What about laundry equipment? If it’s listed, it’s covered—otherwise, it’s not.

Do home warranties cover roofs? Some do, but only the highest-tier warranty package will include roof coverage as standard. Other programs offer roof coverage as add-on coverage for an additional fee, but even then the coverage is limited by the type of roofing material, the style, and the location of any leaks. It is particularly important to read the contract carefully if you’re seeking roof coverage, because the coverage is extremely limited—much more than other elements of coverage.

So what is home warranty coverage best for? A well-maintained house with aging systems or appliances is a prime candidate for a home warranty because the cost of repairing or replacing those items will easily outstrip the cost of the policy. New homeowners who are cash-poor after their major purchase will benefit from the financial umbrella a home warranty provides for the first year or two of homeownership, by which time the new homeowners have established a better emergency fund. Even home sellers can find that the protection of a home warranty eases their minds: The warranty provides financial cover if a system or appliance fails while the home is on the market and works as an enticement to buyers. If the question “Should I get a home warranty?” has run through your mind, chances are there’s something in your home that you’re worried about needing repair or replacement in the near future, and investigating a home warranty would be well worth your time.