Home Warranties in Utah: What They Are, How the State Regulates Them, and Whether One Is Worth It

JoAnn Giordano Editor-in-Chief, Provo.com How we make Provo.com

A home warranty in Utah is a service contract: you pay a fee up front, and when a covered system or appliance breaks down from normal use, the company arranges and pays for the repair or replacement, minus a service fee you pay each time. It is not insurance, it does not cover damage from fire or flood, and the state regulates it lightly. Whether one is worth buying comes down to the age of what is in your house, how much cash you keep for repairs, and what the contract you are offered excludes.

This page explains the Utah rules, how warranties show up in a home purchase, and how to read one. It does not rank companies. It is general information, not legal or financial advice.

What Utah law says a home warranty is

Utah's Insurance Code, at 31A-6a-101, defines a home warranty service contract as one that requires a person to repair or replace a component, system or appliance of a home, or reimburse the owner for doing so:

• upon mechanical or operational failure,
• for a predetermined fee,
• where the company is not the builder, seller or lessor of the home, and
• where the failure happens within a specified period.

That definition draws three useful lines.

It is not homeowners insurance. Insurance covers sudden, accidental loss: a kitchen fire, wind damage, water damage from a burst pipe. A warranty covers wear and breakdown. Many households need both. Our guide to homeowners insurance in Utah Valley explains what the standard policy covers and leaves out.

It is not a builder's warranty. A builder's promise on new construction comes from the builder and is excluded from this definition. Our guide to builder warranties on new construction in Utah covers those.

It is not a manufacturer's warranty. A new furnace or dishwasher comes with its own warranty from the maker, and a home warranty contract may exclude anything still covered by one.

How the state regulates the companies

Utah regulates home warranty companies through the Utah Insurance Department, but in a narrower way than insurers.

Registration. Under 31A-6a-103, no service contract may be sold in Utah unless the provider registers with the department, pays a fee, and files copies of the contracts it sells at least 30 days before using them. Registration expires if the annual fee is not paid before March 1.

Financial backing. The same section requires contracts to be insured under a reimbursement insurance policy from an authorized insurer or a recognized surplus lines carrier. The department's rule R590-166, the Home Protection Service Contract Rule, gives home warranty companies an alternative: a company without a reimbursement policy must maintain a security deposit, surety bond or irrevocable letter of credit. Under R590-166-5, a deposit must be at least $10,000 for every 500 contracts in force in Utah, up to $100,000; a bond or letter of credit is $50,000, rising to $100,000 above 2,500 contracts. The department's annual statement checklist says those companies must file an annual statement, with a CPA-reviewed financial statement and their number of active Utah contracts, within 90 days after their fiscal year ends.

What every contract must say. Under 31A-6a-104, a service contract sold in Utah must contain statements substantially like these:

• "Obligations of the provider under this service contract are guaranteed under a service contract reimbursement insurance policy. Should the provider fail to pay or provide service on any claim within 60 days after proof of loss has been filed, the contract holder is entitled to make a claim directly against the Insurance Company."
• "This service contract or warranty is subject to limited regulation by the Utah Insurance Department. To file a complaint, contact the Utah Insurance Department."
• "Coverage afforded under this contract is not guaranteed by the Property and Casualty Guaranty Association."

A company backed by a deposit or bond under R590-166 is exempt from the reimbursement-policy wording, so the first statement may be missing from its contracts. Which kind of backing a company has tells you who pays if it fails: an insurance company you can claim against directly, or a pool of security the Insurance Commissioner controls.

What it may not do. Under 31A-6a-105, a provider may not use words such as "insurance" or "casualty" in its name or literature, may not make false or misleading statements or leave out a material fact, and no lender may require you to buy a service contract as a condition of a loan. Violations can cost a provider its registration and forfeitures of up to $1,000 per violation, under 31A-6a-109.

What the state does not do is set prices, decide what must be covered or review claim decisions the way it would for insurance. The contract governs.

How warranties show up when you buy or sell

Utah's state-approved Real Estate Purchase Contract has a box for it. Section 10.1 says a one-year Home Warranty Plan will or will not be included, and if it is, who orders it (buyer or seller), who selects the company, a dollar cap on cost, and who pays at settlement (buyer or seller).

Two things to notice:

1. It is negotiable like everything else. A seller-paid warranty is a concession, the same as a price reduction or closing cost credit. In a competitive offer, a buyer may drop it; in a slow market, a seller may offer it.
2. Section 10.2 still applies. The same section of the REPC says the buyer is buying the home "As-Is" and relying on their own inspection. A warranty does not change that. If the inspection finds a failing furnace, deal with it in due diligence; a warranty bought at closing may exclude it as preexisting.

Our guide to the Utah REPC walks through Section 10 and the rest of the form, and our guide to home inspections and appraisals explains how to use the inspection report.

How to read a home warranty contract

State law requires the contract to state certain things clearly. Use that list as your reading guide. Under 31A-6a-104(3) and (4), the contract must conspicuously state or specify:

• The total price and payment terms.
• Any deductible or service fee. This is the per-visit charge, and on a contract with frequent small claims it matters more than the annual price.
• What is covered, and every limitation, exception or exclusion.
• Transfer terms. Can it move to a new owner if you sell?
• Cancellation terms, for you and for the company.
• The prior-approval procedure, if repairs need approval first, including a toll-free claims number and how to get reimbursed for emergency repairs outside business hours.
• Preexisting conditions. Under 31A-6a-104(5), a preexisting-condition clause must "specifically state which preexisting condition is excluded." A vague catch-all is not what the statute describes.
• The reimbursement insurer's name, address and toll-free claims number, if there is one.

Then read the exclusions with your own house in mind. Questions that tend to decide claims:

• Caps. Is there a per-item or per-contract dollar limit? A capped furnace replacement can leave you paying most of the bill.
• Code upgrades and access. Who pays if a repair requires bringing equipment up to current code, or cutting into walls, ceilings or concrete to reach a pipe?
• Maintenance conditions. Can a claim be denied for lack of maintenance records? Keep receipts for furnace service and water heater flushing.
• Repair or replace. Who decides, and are you paid cash instead of a replacement at the company's option?
• Add-ons. If the house has a pool or spa, a well pump, a septic system or a secondary-water sprinkler system, check whether each is in the base contract, offered as an extra, or not covered at all.
• Your own contractor. Must you use the company's network, or can you call your own plumber and be reimbursed?

Utah houses and the parts that fail

A warranty is a bet on breakdowns, so it helps to know what tends to wear out here.

• Hard water. Utah Valley water is hard, which is tough on water heaters, dishwashers, fixtures and softeners. Our guide to Provo's hard water explains the cost. Check whether scale damage is excluded.
• Freeze damage. Cold snaps crack pipes and sprinkler lines. A burst pipe's water damage is an insurance question; the pipe itself may or may not be in the warranty. See our guide to frozen pipes in Utah Valley.
• Furnaces and air conditioning. Long heating seasons and hot summers both work HVAC equipment hard. Our HVAC guide covers lifespans and maintenance.
• Sprinklers. Secondary-water sprinkler systems are common in Utah Valley yards; check whether the contract covers them at all.

So, is it worth it?

A warranty tends to make the most sense when:

• the major systems and appliances are near the end of their lives and you would rather pay a known fee than a surprise bill;
• you do not yet have an emergency fund that could absorb a furnace or water heater replacement;
• the seller is paying for the first year, so your only cost is service fees; or
• you are a new owner who has not yet built a list of trusted tradespeople and wants one phone number to call.

It tends to make the least sense when:

• the house is new or the systems were recently replaced and still under manufacturers' warranties;
• you can set aside the annual price yourself each year and cover repairs from that fund;
• your biggest risks are things the contract excludes or caps; or
• you prefer to choose your own contractors.

A practical middle path for many buyers is to accept a seller-paid first-year plan, use it, and then decide at renewal with a year's experience of the company's claims process. Our guide to hiring home pros in Utah Valley helps with the alternative: building your own list.

If a claim goes wrong

1. Follow the contract's written claims and prior-approval procedure exactly, and keep records of every call and visit.
2. Ask for any denial in writing, citing the contract provision.
3. If the provider is backed by a reimbursement policy and fails to pay or provide service within 60 days after proof of loss, the statute lets you claim directly against the insurer named in the contract.
4. File a complaint with the Utah Insurance Department, whose Property and Casualty Division handles service contract questions.

Related Guides

• Builder Warranties on New Construction in Utah
• Homeowners Insurance in Utah Valley
• The Utah REPC, Explained
• Home Inspections and Appraisals in Utah Valley
• Heating & Cooling in Utah Valley

JoAnn Giordano

Editor-in-Chief

JoAnn Giordano is the editor-in-chief of Provo.com. Having lived in and around Utah Valley for years, she leads the site's editorial direction with a focus on the comprehensive, honest local coverage that helps residents, students, and newcomers feel at home. When she's not shaping Provo.com's restaurant and neighborhood coverage, she's exploring the valley's trails and tracking down the best new spots on Center Street.

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