What is a home warranty?

A home warranty is a service contract that provides coverage for certain repairs and replacements of home systems and appliances that break down due to normal wear and tear. The correct answer highlights the nature of a home warranty as a promise to indemnify for loss if the fact warranted is untrue. This means that if a system or appliance covered under the warranty fails, the warranty provider typically agrees to cover the costs associated with repair or replacement, thereby offering financial protection to the homeowner.

This option aligns well with the fundamental purpose of a home warranty, which is to assure homeowners that they will receive compensation or service if a covered item malfunctions. This is particularly important for new homeowners or anyone purchasing a used home, as it provides peace of mind regarding unexpected costs involved in repairs.

In contrast to the other options, a guarantee on the resale value of a home does not accurately describe what a home warranty provides, as it does not assure homeowners of market value. Insurance coverage for homeowner repairs might sound similar, but traditional home insurance typically covers damage from specific events like fire or theft rather than wear and tear on appliances or home systems. Lastly, while some financial products might assist homebuyers, a home warranty is not a financing option; it is a protection service that homeowners can