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Home warranty costs: Are home warranties worth it?

Expect to pay around $50 per month for comprehensive coverage

Profile picture of Jessica Render
by Jessica Render ConsumerAffairs Research Team
house with home warranty plan

A home warranty provides coverage for essential appliances and major home systems that break down due to normal wear and tear. This type of service contract is designed to save homeowners money on repairs and replacements that can cost hundreds of dollars out of pocket.

The single biggest factor that affects the overall cost of a home warranty is the level of coverage you choose, as home warranty plans can range from basic to comprehensive. When buying a home warranty, you should know upfront which home systems and appliances you want to include so you don't end up paying for home warranty coverage you don't need or won’t use.

How much is a home warranty?

The average cost of a home warranty is around $600 per year, though our research showed prices range between $264 and $1,425 per year, depending on the provider and level of coverage. The average cost of a basic plan is $40 per month, while you’ll pay closer to $60 a month if you want comprehensive coverage.

Home warranties are typically 12-month contracts, with providers giving you the option of paying in full or monthly. The average monthly cost is between $40 and $68.

The average cost of a home warranty is around $600 per year."

In addition to the cost of the plan, a home warranty company charges a service call fee each time you file a claim that results in sending a contracted technician to your home. Service call fees, sometimes called deductibles, range from $55 to $150, depending on your contract.

Typically, the higher your service call fee, the cheaper your monthly or annual premium will be. Most providers offer a repair guarantee so you don't get charged a service call fee more than once in a specified time period if a repair isn’t successful and a contractor has to return. Look for language in the contract about the length of this period, which is usually 30 to 90 days.

Average annual costAverage monthly cost
Appliance protection plan$360 to $540$30 to $45
Systems protection plan$360 to $540$30 to $45
Basic plans$264 to $729$18 to $65
Comprehensive combo plan$546 to $1,425$49 to $70

Home warranty coverage limits

Home warranty contracts have exclusions and coverage limits for individual items; you may have to pay for repairs if the maximum coverage limit of your policy is reached or if the item that breaks down is listed as excluded in your home warranty contract.

For example, let's say your refrigerator breaks down. The total cost to replace your refrigerator is $2,000, but your home warranty policy has a $1,500 coverage limit for refrigerator repair or replacement. The home warranty provider pays the contractor $1,500, and you are responsible for the remaining $500 cost. In some cases, the company may pay you $1,500 in cash directly, with a requirement that you show proof that the appliance has been repaired or replaced.

Home warranty price comparison

When you’re deciding which is the right home warranty service plan for you, cost is an important factor. Prices vary from company to company. The chart below presents some specific figures for three popular home warranty providers.

american home shield logofirst american home warranty logochoice home warranty logo
Price range$30 to $70 monthly, or $360 to $840 annually$38 to $49 monthly, or $420 to $546 annually$47 to $55 monthly, or $532 to $627 annually
Service call fee$75, $100 or $125$85$85
Average cost of combo plan$60 per month$49 per month$55 per month
Items covered in combo plan181716
Average cost per covered item$3.33 per month$2.88 per month$3.43 per month
Available discountsNot listedDiscount for paying annuallyDiscount for paying annually (free 13th month)
american home shield logo$30 to $70 monthly, or $360 to $840 annually$75, $100 or $125$60 per month18$3.33 per monthNot listed
first american home warranty logo$38 to $49 monthly, or $420 to $546 annually$85$49 per month17$2.88 per monthDiscount for paying annually
choice home warranty logo$47 to $55 monthly, or $532 to $627 annually$85$55 per month16$3.43 per monthDiscount for paying annually (free 13th month)

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    Are home warranties worth it?

    For many homeowners, warranties are worth it because they provide financial security against expensive out-of-pocket repair costs. Without a home warranty, you must fully cover the cost of repair or replacement when major appliances like your refrigerator, water heater or air conditioner break down and are no longer covered by the manufacturer.

    Many people don’t have the savings set aside to cover these costly repairs, making a home warranty a worthwhile investment. A home warranty will often pay for itself with one big repair or replacement or a series of smaller ones.

    A home warranty will often pay for itself with one big repair or replacement or a series of smaller ones."

    On the other hand, it’s possible to buy a home warranty and never use it, which could feel like a waste of money. If you do have enough savings to pay for unexpected repairs and your appliances and systems are in good condition, you might decide a home warranty isn’t for you.

    It’s important to buy a plan that suits your needs — carefully read the service contract before purchase. You won’t have a satisfying experience if you skip over the fine print only to find out later, after an appliance or system breakdown, that an urgent repair isn’t covered.

    It’s essential to understand what your home warranty covers by carefully reading the service contract."

    When you’re deciding if a home warranty is worth the cost, take inventory of your major appliances and systems, including their age and whether they have any remaining coverage from the manufacturer.

    Research how much repairs and replacements may cost without a home warranty versus with one of these service contracts. Use this knowledge, along with details about your financial situation and tolerance for risk, to make the right choice for your household.

    How much can you save on home systems and appliance repair costs?

    To determine how much you can save with a home warranty, estimate the cost of repairing or replacing your appliances and systems and compare that with the annual cost of a home warranty plan (plus the service fee for each claim). Here are some steps to follow:

    1. Make a list of your appliances and systems. Include how old they are, if they’re still under the manufacturer's warranty and their current condition. Tip: If an item is more than two years old, it’s probably no longer under a standard warranty.
    2. Determine which of your appliances and systems are essential, are at risk of breakdown and would hurt your wallet to replace. Generally, these are appliances or systems that are not under a manufacturer's warranty and are:
      • Older appliances (older than 8 years)
      • Expensive to replace (for example, replacing an HVAC system costs around $5,000)
      • Necessary to live comfortably (such as your water heater)
    3. Estimate the cost of repair or replacement of all your at-risk items using the chart below.
    4. Compare the cost of repairing or replacing your items with the cost of a home warranty plan. The difference between the cost of repairs and replacements and the cost of a plan is the amount of money you can potentially save. Don’t forget to factor in coverage limits and service call fees.
    5. Remember that a home warranty will not cover preexisting breakdowns, and there is usually a waiting period of 30 days before you can make a claim.
    Average repair cost*Average replacement cost*Average life span**
    Refrigerator$250$1,00013 years
    Oven or range$220$2,00015 years
    Dishwasher$230$97010 years
    Garbage disposal$250$35010 years
    Washer or dryer$180$350 to $2,00012 years
    Air conditioner$375$1,20012 years
    Heating system$300$2,000 to $7,00015 years
    Water heater$575$750 to $1,30010 years (gas); 15 years (electric)

    *According to HomeAdvisor

    **Appliance lifetime varies by make and model. Check with the manufacturer for specific details.

    Pros and cons of home warranties

    Pros

    • Financial protection
    • Multiple plans and coverages
    • Flexible pay options

    Cons

    • Limitations and exclusions
    • Can’t pick your contractor
    • Might never need it

    There are many benefits to having a home warranty. The most obvious is the potential to save hundreds of dollars on repairs and replacements. These contracts are also convenient to use. When a covered item breaks down, you go online or call to file a claim, and the company finds a licensed contractor to send to your home. This eliminates the need for you to search for a reputable technician. Many companies guarantee the quality of repairs.

    A home warranty can easily pay for itself the first time you use it for a major repair. On the flip side, however, many people who have home warranties end up not using them, which is one potential downside.

    You also need to consider the limitations and exclusions of the warranty contract, including payout caps and excluded components of covered items. A home warranty company will deny a claim if the breakdown is not covered under the terms of the agreement. Keep in mind also that you can’t pick your own contractor to make repairs (though some companies offer exceptions to this rule).

    Home warranty cost FAQ

    How much does a home warranty cost per year?
    On average, home warranties cost around $600 per year. Costs depend on the home warranty company, the plan, whether you add on optional coverage, where you live and the size of your home. You may qualify for discounts or savings when you pay for a full year upfront or purchase multiple years of coverage.
    How much does a home warranty cost per month?
    Home warranties typically cost between $40 to $60 per month. Most companies allow you to pay monthly. Monthly costs may be higher than $60 with certain comprehensive warranty plans or if you add on optional coverage, like for a pool or roof.
    What is a service call fee?
    A service call fee is the fee you pay each time you make a claim with your home warranty company and a technician is sent to your home. We’ve seen service fees range from $55 to $150. Some companies give you service call fee options when you sign up for a plan; you can lower the overall cost of your plan by choosing a higher fee.
    How much is the average home warranty deductible?
    Home warranty deductibles, also known as service call fees, typically range from $55 to $150. You pay this fee each time you make a claim and the home warranty company sends a contractor to your home.
    Is a home warranty part of closing costs?
    If a home warranty is part of the home sale, it is included in the closing costs. Whether it's a part of the buyer’s or the seller's costs depends on your purchase contract. The seller of a home is not required to offer you a home warranty, and you are not required to purchase one.
    Who pays for a home warranty: the buyer or seller?
    This varies depending on your home purchase contract and local standards. In many cases, the seller pays for the warranty as an incentive for buyers. If a warranty is not included in the home's purchase, the buyer may choose to purchase a plan on their own or negotiate the inclusion of a home warranty with the seller. A home warranty can be purchased at any time and does not need to be part of a home sale. For more, read about the differences between home warranties for sellers vs. buyers.

    Bottom line: Should I get a home warranty?

    Home warranties provide financial security at a relatively affordable price. Having one can save you significant money on costly repairs of appliances and systems and even pay for a replacement item. If you don’t want to worry about paying out of pocket when a key household item breaks down, spending $40 to $60 per month for protection is often worth it. The average home warranty costs $600 per year, typically covering more than $20,000 worth of appliances and systems in your home.

    It’s essential to understand what your home warranty covers by carefully reading the service contract. As you’re thinking about if you should buy a home warranty, note that it’s not the same thing as homeowners insurance. Homeowners insurance covers the structure of your home and the contents inside against risks like fire, storms, vandalism and theft. It’s required if you have a mortgage, while a home warranty is an optional, added layer of protection.

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    Profile picture of Jessica Render
    by Jessica Render ConsumerAffairs Research Team

    As a member of the ConsumerAffairs research team, Jessica Render is dedicated to providing well-researched, valuable content designed to help consumers make informed purchase decisions they can feel confident making. She holds a degree in journalism from Oral Roberts University.