Home warranty statistics 2023

The home warranty industry

As of 2022, the home warranty industry had a market size of $3.6 billion, up from $3.3 billion in 2020.

The market size of the home warranty industry in the US has grown 3.7% per year on average between 2017 and 2022, increasing faster than the US economy overall. The global home warranty service market is expected to reach a value of about $13.6 billion by 2030, up from about $7.3 billion in 2020, giving it a projected compound annual growth rate of 6.3% from 2021 to 2030.

• An interest in protecting major appliances and a rise in awareness of warranty services are driving market growth. The impact of COVID-19 on the construction and manufacturing industries has restrained market growth, as have warranties’ strict terms and conditions and hidden charges imposed by providers.
• The most populous region of the U.S., the Southeast region, has the highest concentration of home warranty providers.

Types and level of coverage

There are three primary types of home warranties.

Many providers will offer optional add-on coverage at an additional cost. Common add-ons include:

• Central vacuum
• Guest unit
• Pool and spa
• Roof leak
• Septic systems
• Standalone freezer
• Sump pump
• Water softener
• Rekeying
• Annual heating, ventilation and air conditioning tune-ups
• Limited pest control
• Damage and defect coverage for consumer electronics

What is not covered by a home warranty?

Home warranty policies specify systems and appliances that are covered, but they also include exclusions — items that are not included in purchased coverage.

Some common exclusions are:

The basics of home warranty regulations

Home warranty regulation is difficult to pinpoint. The federal government sets overall minimum regulations, but individual states and jurisdictions can set and enforce their own standards as long as they do not violate federal law. Regulation and home warranty oversight vary from state to state. In some states, home warranties are regulated by an office of insurance regulation or commissioner of insurance, while other states assign the task to a state real estate commission or department of financial services.

There is also a nonprofit organization, the National Home Service Contract Association (NHSCA), which regulates member home warranty providers that use its Code of Ethics. Consumers can look for a six-digit code that identifies a home warranty provider as a reputable, NHSCA-accredited company.

Home warranty costs and deductibles

A standard home warranty costs between $40 and $60 per month. Discounted annual costs are typically about $450 to $600.

Most home warranties require a deductible to be paid each time a service technician visits your home. Deductibles generally range from $75 to $150 per visit.

Typical repair and replacement costs

On average, homeowners pay between 1% and 4% of their home’s purchase price for major repairs each year.

• In 2022, homeowners spent an average of nearly $6,000 on home repairs and maintenance.
• Spending across various home projects decreased by about 17% from 2021 to 2022.
• On average, American homeowners in 2022 spent:
  • $2,467 on maintenance across 7.5 home projects
  • $1,953 on emergencies across 1.8 home projects
  • $8,484 on home improvements across 3.2 projects
• Among the 78% of respondents in a Hippo Insurance Services survey who reported having regrets about purchasing their homes:
  • 49% say homeownership is more expensive than they anticipated.
  • 47% say that they have had too many unexpected issues with their home.
  • 47% say there is too much maintenance and upkeep involved.

Home warranty coverage can help defray some common costs associated with homeownership, particularly if you have an older home or appliances.

Compare the average cost of warranty-covered repair — $75 to $150 — with the estimated cost of repair without a warranty:

Average lifespan of appliances and systems typically covered by a home warranty

It is important to know the average life expectancy of systems and appliances to understand how long it will be before you will need to replace them. Here are the average lifespans of major home systems and appliances:

Home warranty vs. home insurance

Home warranties and home insurance are not the same. Homeowners insurance provides coverage for property damage caused by an accident, unexpected event or natural disaster. It also covers liability in case someone is injured on your property. A home warranty pays to repair or replace specific major systems and appliances due to normal wear and tear or loss of functionality with normal use.