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Texas Department of Insurance
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July 28, 2022

Thinking about buying a residential service contract? It’s not home insurance.


When you’re buying a home, you also might be asked if you want a residential service contract. They’re sometimes called a home warranty. 

These service contracts are different than home insurance. Insurance pays for damages from events your policy covers like fire or theft.

A residential service contract covers certain items in your home when they break down from normal wear and tear. (Home insurance doesn’t pay for wear and tear.) Depending on your contract, you may get coverage for appliances, such as stoves and refrigerators, to water heaters, electrical and plumbing systems, and even swimming pools.

Residential service contracts can bring peace of mind about the machines and systems that keep your home comfortable. Not all service contracts are the same, though. Remember to carefully read the contract before signing up. 

Under Texas law, companies that sell residential service contracts must be licensed by the state.

In our latest video, we spoke with Elizabeth Salinas-Strittmatter with the Texas Department of Licensing and Regulation (TDLR) about how residential service contracts work.

Learn more