Things break down. Unexpected expenses are part of life, but they don’t have to upend our budgets or our lives—and that’s where a warranty can come in handy.
When it comes to saving money on repairs and replacements, which type of warranty will save you the most? It all depends on what items you need covered and why. Read on to discover whether a home warranty or manufacturer’s warranty is best when something breaks down.
What is a manufacturer’s warranty?
A manufacturer’s warranty is a service contract between the Original Equipment Manufacturer (OEM) of a specific system or appliance and the original person to purchase that specific item. It is typically included free of charge as part of the original item purchase.
In most cases, the manufacturer agrees to cover the costs of repair, replacement, parts, and/or labor for the specific system or appliance, as long as it fails within the timeframe of the agreement and under specific circumstances (e.g., normal wear and tear, poor workmanship, etc.).
How long does a manufacturer’s warranty last?
Manufacturer warranties typically last 12 months, starting either upon the purchase date or on the date of installation. However, the length of coverage for a specific item depends on the terms of the policy. Many manufacturers also let you purchase additional years of extended coverage from the OEM or a third-party provider. In any case, it’s a good idea to retain point-of-purchase receipts to verify yourself as the original purchaser, should you ever need to file a claim. Some products may require registration to activate the warranty as well; be sure to review the warranty requirements with the item you purchase.
IMPORTANT NOTE: Manufacturer warranties may not be transferrable. Depending on the OEM’s policies, some individual home system and appliance warranties do not automatically transfer with changed ownership, and some don’t transfer at all. This is especially important when purchasing a home with recently updated appliances, as they may not transfer if anything goes wrong.
Be sure to do your research on any home systems or appliances listed as ‘new’ in the home you are purchasing. Find out whether or not their warranties can transfer, and what steps you need to ensure that they do.
What is a home warranty?
Where a manufacturer’s warranty is designed to cover one specific item or system, a home warranty (aka home service plan or home service contract) covers many different home systems and appliances in one package. Home warranties may offer additional item add-ons as well (washer, extra refrigerators, pool, etc.), and plans are typically available for one or more years of coverage.
A home warranty is not the same thing as homeowners insurance, though it can be useful in addition to it.
Home warranty advantages
One big advantage of home warranties is transferability: A home warranty is almost always transferrable from the seller to the buyer of a home through an existing contract, whereas a manufacturer’s warranty may not be. Another advantage is the extent of coverage: Many items for one low price and all with the same claims policy versus individual warranties for each item, each with their own policies and requirements for claims.
IMPORTANT NOTE: Depending on the contract, a home warranty may exclude coverage of items currently under manufacturer’s warranty. As those manufacturer warranties expire, however, having a third-party home warranty to extend that coverage could easily save you hundreds, if not thousands, of dollars.
Which warranty do I need?
Now that you know the difference between a manufacturer’s warranty and a home warranty, how do you choose which bets fits your budget? The answer lies in researching what your budget needs most.
- Which appliances do you need covered? If only one or two, the manufacturer’s warranties that come with purchase may suit you best. A home warranty may be better if you are purchasing a home, giving you broader coverage over a larger selection of items and more flexibility.
- What is your budget for coverage? As we mentioned before, manufacturer’s warranties tend to come free of charge with the items they apply to, however they may not be transferrable and typically only last one year. Will you need more coverage beyond that?
- What customer experience is most important to you? If you don’t mind conducting follow-ups, a manufacturer’s warranty could be fine. If you want a company to do most of the work for you, a home warranty may be better.
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