These definitions describe how terms are commonly used. Providers use different names for similar ideas, and each contract may define a term in its own way. When the contract has its own definition, that definition controls.
A–C
Add-on (optional coverage)
An item you can add to a base plan for an extra charge, such as a pool, well pump, or limited roof-leak coverage. Add-ons often have their own caps and conditions.
Aggregate limit
The most a provider will pay across all claims during the contract term, if the contract sets one. Compare it with per-item caps. See limits and caps.
Appliance plan
A plan type focused on household appliances, such as a refrigerator, range, dishwasher, or washer and dryer. Providers name and package these differently.
Arbitration clause
A contract term requiring disputes to be resolved through arbitration rather than in court. Read it before you buy so you know how disputes would work.
Cancellation fee
A charge some contracts apply if you cancel before the term ends. Contracts also differ on how they calculate refunds.
Cash-out (buyout)
A payment the provider offers instead of repairing or replacing a covered item. The amount is usually set by the contract’s terms, which may not match what you’d pay to replace the item yourself.
Combination plan
A plan that bundles major home systems and appliances. Providers market these under different names.
Code upgrades
Changes needed to bring equipment or installation up to current building codes during a repair or replacement. Many contracts exclude or cap these costs.
Coverage cap (per-item limit)
The most a contract will pay for a particular item or type of repair. A covered failure that costs more than the cap can leave you paying the difference.
Covered item
A system, appliance, or component the contract lists as eligible for repair or replacement, subject to its terms. See what’s commonly covered.
D–N
Diagnosis
The technician’s assessment of what failed and why. The cause recorded here often decides whether a claim is approved.
Exclusion
Something the contract specifically doesn’t cover, such as certain parts, causes of failure, or types of damage. See common exclusions.
Haul-away (disposal)
Removing and disposing of a replaced item. Some contracts include it, some cap it, and some exclude it.
Improper maintenance
A failure the provider attributes to a lack of reasonable upkeep, such as unchanged filters. It’s a common reason for denials, so keep your maintenance records.
Network contractor
A technician or company the provider assigns to service requests. Many contracts require you to use the provider’s network unless it gives approval otherwise.
Non-covered parts
Specific components the contract excludes even when the item itself is covered, such as certain cosmetic parts, accessories, or attached fixtures.
Normal wear and tear
Gradual deterioration from ordinary use and age. Home warranties generally focus on failures from wear and tear, while homeowners insurance generally excludes them. See warranty vs. insurance.
P–R
Permits
Official approvals that may be needed for some repairs or replacements. Contracts differ on whether permit costs are covered.
Pre-existing condition
A defect or malfunction that existed before coverage began. Many contracts exclude these, and their definitions vary, including how the provider determines whether a problem was pre-existing.
Renewal
Continuing the contract for another term. Some contracts renew automatically, and the price at renewal can differ from the original price.
Repair vs. replace
The provider’s decision on whether to repair a covered item or replace it. Contracts usually say who makes the call and what kind of replacement is provided.
Response time
How quickly the provider says it will arrange a technician after you file a request. Not every contract commits to one.
S–Z
Sample contract
A copy of the contract terms a provider publishes for review before purchase. It’s often state-specific. It’s the most important document when comparing plans. See how to compare plans.
Secondary (consequential) damage
Damage caused by a covered failure, such as water damage from a leaking water heater. Home warranties commonly exclude it.
Service contract
The legal category home warranties often fall into. A service contract isn’t an insurance policy, though how these contracts are regulated varies by state.
Service fee (service call fee)
The amount you pay each time a technician is dispatched for a claim. See service fees.
Systems plan
A plan type focused on major home systems, such as heating, cooling, plumbing, and electrical.
Trade call fee
Another name some providers use for the service fee.
Waiting period
The time between buying a contract and when coverage begins. Failures during this period are usually not covered.
Next steps
- Put these terms to work with our plan comparison worksheet.
- Browse all home warranty guides.
This page is general education, not legal, financial, or insurance advice. Home warranty terms vary by provider, plan, and state; the contract you sign controls what is covered. Spotted an error? Request a correction.
