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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 you choose to cover. When buying a home warranty, you'll want to know upfront which home systems and appliances you want to include so you don't pay money for home warranty coverage you don't need.

How much is a home warranty?

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

In addition to the cost of the plan, companies typically charge 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 between $50 to $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 to $600 per year
  • Average monthly payment: $25 to $50
  • Service call fees: $50 to $100 per visit

Other costs related to home warranties

Depending on your policy, you may have to pay for repairs when the maximum coverage limits your policy will payout 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 provides a cash payout for the $1,500, and you're responsible for covering the remaining $500 yourself.

Home warranty price comparison

When deciding which is the right home warranty service plan for you, there are a few things you want to consider in terms of monthly and annual cost. While prices will vary from company to company, the chart below presents some average figures for you to think about before making a decision.

Average annual costAverage monthly cost
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, extended home warranties are worth it for the financial certainty they provide. Without a home warranty, you must cover the repair or replacement out of pocket when appliances like your refrigerator, water heater or air conditioner break down. Many people 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 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 essential to understand what your home warranty covers by carefully reading the contract before signing up for the service. You won’t have a satisfying experience if you wait until an urgent repair is required and discover what you need isn’t covered.

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, estimate the cost of repairing or replacing your appliances and systems and 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 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 appliances and systems you have that are at risk of a breakdown or 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 eight years)
    • Expensive to replace (for example, the price tag to replace an HVAC system is $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 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.
  5. In most cases, you cannot purchase a home warranty for an item after it has broken down. However, if the item has preexisting conditions, you may be able to have it covered under a current warranty.

Repair and replacement costs for common appliances

Average repair costAverage replacement costAverage lifespan*
Refrigerator$200 to $400More than $1,00013 years
Oven or range$100 to $200$500 to $2,50015 years
Dishwasher$100 to $200$300 to $60010 years
Garbage disposal$100 to $150$20010 years
Washer or dryer$120 to $500Less than $1,00012 years
Air conditioner$160 to $530$5,00012 years
Heating system$130 to $450$3,000 to $5,00015 years
Water heater$200 to $900$2,000 to $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 ranges between $300 to $600 per year, it typically covers more than $20,000 worth of appliances and systems in your home. Spending $25 to $50 per month is often worth it to know you’re covered if you have appliances or systems that are at risk of breaking down. It is also important to understand that a home warranty is not the same thing as homeowners insurance. If you want to cover your home from disasters or theft, be sure to research homeowners insurance to see how it works and how much it costs.

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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.