Home warranty statistics 2024
A home warranty is a service contract that covers home systems and major appliances. This includes the electrical, HVAC, and plumbing systems, as well as refrigerators, ovens, dishwashers, washers, and dryers, among others. It covers the costs of repairing or replacing home systems or appliances when they malfunction or break due to regular use. Providers offer three primary types of home warranty plans: whole-system plans, appliance plans, and a combination of both.
Homeowners can face significant expenses when replacing or repairing major home systems and appliances, with costs potentially reaching thousands of dollars. In 2023, households spent an average of $4,000 on maintenance and emergency repairs.1 Home warranties play an important role in mitigating these costs.
The U.S. home warranty industry was valued at $3.9 billion in 2023.
Jump to insightIn 2023, homeowners spent an average of $13,667 on home improvement projects, maintenance, and emergency repairs.
Jump to insightApproximately 29% of homeowners recommend that other homeowners prioritize planning and allocating funds for regular home maintenance and emergencies.
Jump to insightIn 2023, homeowners reported that the most common systems experiencing breakdowns included HVAC (24%), washer/dryer (21%), and indoor plumbing and fixtures (21%).
Jump to insightThe home warranty industry
In 2023, the U.S. home warranty industry was valued at $3.9 billion (based on revenue). The industry’s market size showcased an average annual growth rate of 3.4% from 2018 to 2023. This means the industry expanded at a faster pace than the overall economy during this five-year period.
Despite this expansion, the home warranty industry's penetration rate is low, at approximately 5% across all U.S. households. However, the increasing complexity of home systems and appliances, along with shifts in consumer preferences, suggest potential for broader market adoption. Another important factor is mortgage rates. The COVID-19 pandemic, for instance, played a significant role in altering market dynamics. Initially, it contributed to a surge in housing demand due to historically low mortgage rates. Nevertheless, as mortgage rates started to rise, the home warranty industry experienced a 5.4% revenue decline in 2023.
Concerning market share concentration, the top four home warranty providers account for less than 40% of the total industry revenue. Geographically, the southeast region of the U.S. holds the highest number of home warranty providers, which reflects the region's high population.
The global market for home warranty services is estimated to reach $13.6 billion by 2030. The industry will expand at a compound annual growth rate of 6.3% between 2021 and 2030.
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?
In addition to identifying which appliances and systems are covered, home warranty policies also establish exclusions — items that are not included in purchased coverage.
Some common exclusions are:
| Warranty exclusion | Description |
|---|---|
| Preexisting conditions | Appliances that failed or were defective before coverage was purchased |
| Cosmetic damage | Dents, scratches or other issues that affect an appliance’s appearance but not its functionality |
| Improper installation | Failure because a system or appliance was not properly installed by a certified professional |
| Modifications | Use of third-party components in a system or appliance |
| Appliance misuse | Damages or problems that arise from the homeowner using the appliance for something other than its intended purpose |
| Maintenance neglect | Damages or problems that arise from the homeowner not keeping up with regular maintenance |
| Specific components of a covered item | For example, a garage door opener may be covered, but not its door or track assemblies. |
| Currently covered under another warranty | New appliances covered under a manufacturer’s warranty or third-party warranty |
| Costs that exceed the coverage limit | For example, if a contract’s coverage limit is $2,000 and the repair cost is $2,500, the homeowner would pay $500 out of pocket. |
When it comes to solar panels, most home warranty plans do not offer coverage, but homeowner’s insurance policies usually protect solar panels. That said, according to EcoWatch, panel manufacturers offer warranties that can include:
- An equipment warranty to safeguard against defects and unforeseen damage.
- An efficiency warranty that specifies a maximum annual rate of degradation after installation.
- A labor warranty for addressing installation-related issues and covering the costs of necessary repairs.
- A roof leak warranty, offered by only a few companies, which compensates for damage due to leaks at the roof penetration points where panels are installed.
The basics of home warranty regulations
Home warranty regulation varies from state to state, and there is no specific high-level federal oversight of the industry. That said, home warranty providers are subject to the same regulations set by the Federal Trade Commission (FTC) for all major companies. The FTC mandates truthful advertising, along with the full disclosure of information to consumers. The FTC requires home warranty providers to explicitly outline all associated costs, fees, and the extent of coverage to consumers before they purchase any warranty plans. Additionally, according to FTC guidelines, companies must offer a detailed description of their services and include a 30-day cancellation policy.
State-level regulation and oversight of home warranties differ significantly across states. 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.
Self-regulation in the home warranty industry is supported by two key non-governmental organizations. The Service Contract Industry Council (SCIC), a national trade association, represents service contract companies and collaborates with legislators to establish consistent, equitable standards nationwide. This effort aims not only to safeguard consumers but also to keep the industry competitive. Meanwhile, the National Home Service Contract Association (NHSCA) sets ethical and quality benchmarks for its member home warranty companies. Membership in the NHSCA is often an indicator of a company's dedication to delivering high-quality services.
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
In 2023, homeowners spent an average of $13,667 on home improvement, maintenance, and emergency repairs, according to Angi’s 2023 State of Home Spending Report:
- Spending across various home projects increased 6% from 2022 to 2023.
- On average, American homeowners in 2023 spent:
- $2,458 on maintenance across 6.8 projects per household.
- $1,667 on emergencies across 1.5 home projects.
- $9,542 on home improvements across 2.8 projects.
According to the Hippo Insurance 2023 national survey of U.S. homeowners, 46% of respondents reported that something unexpected went wrong in their homes in the past 12 months:
Homeowners reported that the primary systems experiencing breakdowns included HVAC (24%), indoor plumbing and fixtures (21%), washer/dryer (21%), water heater (18%), and refrigerator (18%).
- The top three maintenance issues included broken appliances (31%), water damage (23%), and roof damage (20%).
- 38% of respondents stated home repair expenses are their primary worry for 2024.
- 29% of respondents would recommend that other homeowners prioritize planning and allocation of funds for regular home maintenance and emergencies in 2024.
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 with the estimated cost of repair without a warranty:
| Appliance | Repair cost without home warranty |
|---|---|
| Washer | $150 - $500 |
| Dryer | $50 - $800 |
| Refrigerator | $200 - $400 |
| Oven | $100 - $200 |
| Dishwasher | $100 - $200 |
| Plumbing systems | $180 - $489 |
| Heating and air conditioning | $130 - $530 |
| Water heater | $200 - $900 |
| Electrical panel | $522 - $2,081 |
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 need to replace them. Here are the average lifespans of major home systems and appliances based on normal wear and tear conditions and recommended regular maintenance:
| Average lifespan (years) | |
|---|---|
| Air conditioner | 11 |
| Heat pump | 12.5 |
| Air ducts | 80 |
| Whirlpool tub | 35 |
| Toilets | 100+ |
| Ceiling fans | 7.5 |
| Water heater | 9 |
| Well pump | 15 |
| Sump pump | 7 |
| Plastic water lines | 75 |
| Refrigerator | 11 |
| Freezer | 15 |
| Dishwasher | 9 |
| Electric ranges | 14 |
| Microwave | 9 |
| Washing machine | 10 |
| Clothes dryer | 13 |
| Garbage disposal | 12 |
| Trash compactor | 6 |
| Central vacuum | 20 |
Home warranty vs. home insurance
Home warranties and home insurance are not the same. Homeowners insurance covers your home's structure, personal property, and legal liability for injuries that occur on your property. However, coverage is only provided for losses resulting from perils specified in your policy.
On the other hand, a home warranty is a service agreement, typically lasting one year, that covers the repair or replacement of certain home systems and appliances. Unlike insurance policies, home warranties are service contracts designed to cover the costs of repairing or replacing specific components in your home.
| Home warranty | Homeowners insurance | |
|---|---|---|
| What is covered? | Major systems and appliances | Structural elements of the house, personal property and liability |
| When does it apply? | Damage or loss of functionality during normal use; normal wear and tear | Property damage from accidents, natural disasters, vandalism or theft |
| When is it required? | Always optional | Required with a mortgage |
| What is the average annual cost? | $450 - $600 | $300 - $4,000 |
| How are companies regulated? | State standards and enforcement with minimal federal regulation | Regulated by state insurance commissioners, the National Association of Insurance Commissioners and the Financial Stability Oversight Council |
FAQ
Is there a deductible with a home warranty?
Yes. A deductible (also called a service call fee) must be paid whenever the warranty company sends a service technician to your home. Deductibles range from $75 to $150 per technician visit.
What are the cons of a home warranty?
While home warranties can save you hundreds (or even thousands) of dollars on home repairs, there are other factors to consider. Home warranties have limitations and exclusions for appliance and system coverage; policies may have claim caps; most companies do not allow you to choose your own contractor; and many home repairs are inexpensive and may cost less than the home warranty itself.
What does a home warranty cover?
Home warranties cover the repair or replacement of major home appliances and systems due to loss of functionality or damage as a result of normal wear and tear. Many home warranty companies also allow homeowners to purchase additional coverage for items such as central vacuums, pools and standalone freezers, or for services like rekeying and pest control.
How much does a homeowner pay for a home warranty plan?
A standard home warranty costs between $40 and $60 per month.
Do home warranty plans cover solar panels?
Most home warranty plans do not offer coverage for solar panels, but homeowner’s insurance policies usually provide protection. In addition, panel manufacturers usually offer warranties that include equipment, efficiency, and labor warranties. A limited number of manufacturers also offer rook leak warranties.
References
- “State of Home Spending”. Angi. Evaluated Feb. 21, 2024.Link Here
- “Home Warranty Providers in the US - Market Size, Industry Analysis, Trends and Forecasts (2024-2029)”. IBISWorld. Evaluated Feb. 21, 2024.Link Here
- “Hippo’s Annual Housepower Report”. Hippo Insurance Services. Evaluated Feb. 22, 2024.Link Here
- “Home Warranty Providers in the US - Market Size, Industry Analysis, Trends and Forecasts (2024-2029) - Industry Statistics and Trends”. IBISWorld. Evaluated Feb. 22, 2024.Link Here
- “Global Home Warranty Service Market to 2030 - Opportunity Analysis and Industry Forecasts”. ResearchAndMarkets. Evaluated Feb. 22, 2024.Link Here
- Simms, D., Dunn, A. “Solar Panel Warranty 101 (What to Know in 2024)”. EcoWatch. Evaluated Feb. 23, 2024.Link Here
- Brooks, E. “Home Warranty Regulation: Understanding the Laws”. Liberty Home Guard. Evaluated Feb. 23, 2024.Link Here
- “Housepower Guide”. Hippo Insurance Services. Evaluated Feb. 22, 2024.Link Here
- “InterNACHI's Standard Estimated Life Expectancy Chart for Homes”. International Association of Certified Home Inspectors. Evaluated Feb. 23, 2024.Link Here
- “Homeowners Insurance”. Louisiana Department of Insurance. Evaluated Feb. 23, 2024.Link Here
- “Office of the Attorney General Consumer Alert - Home Warranties”. District of Columbia Office of the Attorney General. Evaluated Feb. 23, 2024.Link Here
- Howard, P. “How much is homeowners insurance in the U.S.?”. Policygenious. Evaluated Feb. 22, 2024.Link Here