Home warranty
From Wikipedia, the free encyclopedia
A home warranty is a contract that agrees to provide a homeowner with discounted repair and replacement services.[1] However, the words "home warranty" are not always used explicitly to mean a legal warranty is being conveyed. In many cases, at least in the United States, a home warranty is not a warranty at all, but rather a home service contract that covers the repair and/or replacement costs of home appliances, major systems such as heating and cooling, and possibly other components of a home, structural or otherwise. Coverage varies significantly across home warranty companies(https://www.forbes.com/advisor/l/best-home-warranty/).
Modern home warranty products developed out of earlier builder-backed schemes that provided structural warranties on new homes in the mid-20th century. In the United Kingdom, the National House Building Council (NHBC) began offering new-home warranties in 1936, and similar provincial new home warranty programs were operating in Canada by the 1970s.
In the United States, what are now marketed as home warranties evolved as a type of service contract during the 1970s, alongside extended warranties on automobiles and other consumer goods. Service-warranty companies expanded during that decade as manufacturers shortened standard warranties and third parties began selling separate service agreements, including “home warranty” and home service plans. The federal Magnuson–Moss Warranty Act of 1975, which requires clearer disclosure of written warranties and service contracts, helped shape the legal environment for these products, although most home warranties are regulated primarily under state law.
From the late 1970s onward, several U.S. states created specific statutes for residential service contracts or home warranty companies.[2] Texas, for example, began licensing “residential service companies” that sell home warranty contracts in 1979, while Florida created separate categories for home warranty associations and service-warranty associations in its insurance code.
In 1995 the National Association of Insurance Commissioners (NAIC) adopted the Service Contracts Model Act (Model #685), providing a framework that many states later used or adapted to regulate service-contract and home-warranty providers.
In the 21st century, the home warranty market has grown into a multi-billion-dollar segment of the residential services industry, with some research firms estimating home-warranty service revenues at around US$4 billion in the mid-2020s and projecting continued growth.
Home warranties have also become a common incentive in real-estate transactions in some markets, offered by sellers or real-estate agents as part of closing packages.
