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Home warranty costs: Are home warranties worth it?

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by Jessica Render ConsumerAffairs Research Team
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The biggest factors that impact the overall cost of a home warranty are the type and size of your home, the state you live in and what items you choose to cover. When buying a home warranty, you'll want to know upfront which systems and appliances you want to include so you don't pay money for coverage you don't need.

How much is a home warranty?

The average cost of a home warranty service contract ranges between $300–$600 per year. The cost will vary depending on where you live and the level of coverage you need. Home warranties are typically renewed annually, but most providers will bill the cost of your contract monthly, making the average monthly cost $25–$50.

In addition to the cost of the plan, you will be charged a trade service call fee each time you file a claim that results in the warranty provider sending their contracted technician to your home. Similar to insurance deductibles, service call fees are paid directly to the technician and typically cost $50–$100 per service call visit. Some providers don't charge additional fees if multiple visits are required for the same repair, while other providers may charge per visit or charge a service fee if a subsequent visit occurs outside of a certain time period, like 60 days from the original repair.

Summary of home warranty costs

  • Total plan cost: $300–$600 per year
  • Average monthly payment: $25–$50
  • Service call fees: $50–$100 per visit

Other costs related to home warranties
Depending on your policy, you may have to pay for repairs when the maximum coverage limit your policy will pay out is reached, or if the repair needed is with an item that’s listed as excluded in your contract.

For example, let’s say your refrigerator breaks down and can’t be repaired. The total cost to replace your refrigerator is $2,000, but your home warranty policy indicates a $1,500 coverage limit for refrigerator repair or replacement. In most scenarios, the provider will provide a cash payout for the $1,500, and you would be responsible for covering the remaining $500 yourself.

Home warranty price comparison

Average Cost Per YearAverage Cost Per Month
Appliance Protection Plan$430–$720$35–$60
Systems Protection Plan$300–$400$25–$35
Basic / Standard Combo Plan$530–$720$45–$60
Comprehensive Combo Plan$400–$700$30–$60
Combo Plan with add-on coverage$700–$1,000$60–$85

Are home warranties worth it?

For many homeowners, home warranties are worth it for the peace of mind they provide. Without a home warranty, when appliances like your refrigerator, water heater or air conditioner break down from normal wear and tear, you’ll be covering the repair or replacement out of pocket, and many of us don’t have the savings to cover those unexpected costly repairs. A home warranty will often pay for itself with one big repair or replacement, or with a series of smaller ones.

On the other hand, without the right coverage, a home warranty may feel like a waste of money. It’s important to understand what your home warranty does and does not cover by reading a contract in-depth before signing up for the service. If you wait until an urgent repair is needed to read your contract only to find out that what you need isn’t covered, it’s not going to be a very satisfying experience. This is why many homeowners have expressed frustration with what feels like a bait and switch with home warranty companies. You can help alleviate this frustration by comparing several contracts for home warranty plan coverage and selecting the best plan for the items in your home.

How to know if you should buy a home warranty

To decide if a home warranty is worth it or not, first estimate the cost of repairing or replacing your appliances and systems, then compare that to the annual cost of a home warranty plan plus the service fee for the claim.

  1. Make a list of your appliances and systems. Include how old they are, if they’re still under manufacturers warranty or not, and their current condition.
    • Tip: If an item is older than 2 years, it’s probably no longer under a standard warranty.
  2. Determine which appliances and systems you have that are "at risk" of a breakdown or would hurt your wallet to replace. Generally, these will be appliances or systems that are not under a manufacturer's warranty and are:
    • Getting old (older than 8 years)
    • Expensive to replace (for example, the price tag to replace an HVAC system is $5,000)
    • Necessary to live comfortably (like your water heater)
  3. Estimate the cost of repair or replacement of all your “at risk” items using our chart below.
  4. Take the annual price of a home warranty plan and subtract the cost of repair or replacement. If you're feeling a little uneasy about the total cost of your “at risk” items, then you should probably buy a home warranty. If you’re not, then a home warranty might not be worth the money.
Average Repair CostAverage Replacement CostAverage Lifespan
Refrigerator$200–$400More than $1,00013 years
Oven or Range$100–$200$500–$2,50015 years
Dishwasher$100–$200$300–$60010 years
Garbage Disposal$100–$150$20010 years
Washer or Dryer$120-$500Less than $1,00012 years
Air Conditioner$160–$530$5,00012 years
Heating System$130–$450$3,000–$5,00015 years
Water Heater$200–$900$2,000–$4,00010 years (gas)
15 years (electric)

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

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Bottom line: Are home warranties worth the money?

While your average home warranty cost will range between $300 to $600 per year, it typically covers over $20,000 worth of appliances and systems in your home. Spending $25-$50 per month is a fairly inexpensive price to pay for your peace of mind if you have appliances or systems that are at risk of breaking down.

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    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.