What does the term "home warranty" refer to?

The term "home warranty" refers specifically to a service contract that covers the repair or replacement of certain home components. This typically includes systems like plumbing, electrical, and heating/air conditioning, as well as major appliances such as refrigerators and ovens. Home warranties provide homeowners with peace of mind, knowing that if one of these covered items fails, they can have it repaired or replaced fairly easily and often at a minimal cost. This coverage is especially beneficial for new homeowners or those who may not have the funds to cover unexpected repairs.

In contrast, an insurance policy on new construction homes focuses on protecting against structural issues or defects rather than the specific components and appliances that a home warranty covers. Similarly, a type of real estate contract is a broader concept that does not define the specific service agreement provided by a home warranty. Lastly, a governmental guarantee on home loans does not pertain to the physical components of a home but rather supports the financing aspect of purchasing property. Each of these distinctions highlights why the definition of a home warranty as a service contract is the most accurate.