What is a home warranty?
“A home warranty is a service contract that protects you against repair costs or provides replacement assistance for systems and appliances when they fail from everyday wear and tear,” explained Sylvia K. Alston, CEO and managing partner of insurance brokerage firm Momentum Risk Management in Short Hills, New Jersey.
This differs from homeowners insurance, which “primarily covers the structure of the building from catastrophic damage,” said John Wagner, a real estate agent with Compass in Los Angeles, California. Homeowners insurance comes in handy after disastrous events, such as fires and storms, while home warranties cover mechanical failures as systems age.
Some home warranty companies offer optional add-ons for pools, spas or specialty systems at an extra cost.
What each type of coverage typically includes
| Home warranty | Homeowners insurance |
|---|---|
| Heating and cooling systems | Building structure |
| Water heaters | Roof and walls |
| Electrical systems | Personal belongings |
| Plumbing fixtures | Liability claims |
| Kitchen appliances (e.g., refrigerators, dishwashers, ovens) | Fire and storm damage |
| Laundry machines | Theft |
Why consider a home warranty when buying a house?
“A home warranty offers protection against sudden repair bills that can disrupt a family budget,” Alston said. Unforeseen mechanical failures can cost thousands of dollars in a single instance.
Home warranty plans cost $350 to $900 per year.
A home warranty is most useful for first-time buyers and owners of older homes. “Parts fail even if the machines have years of life left in them,” Wagner pointed out. “A home warranty can help you minimize the costs when something needs repairs.”
Beyond the financial cushion, home warranties simplify life for people still figuring out homeownership. If something breaks, you call the warranty company and it sends someone to fix it. No Googling "best HVAC repair near me" at midnight or wondering if the contractor is legitimate.
Sellers get something out of this arrangement, too. Offering a warranty shows you're not trying to unload a lemon. Buyers feel better knowing they won't get slammed with a $3,000 furnace replacement a month after moving in. In tight markets, that peace of mind can tip the scales in your favor.
Pro tip
“Pair home warranty protection with routine maintenance and stay on top of the things that aren’t covered,” Mark McAlpin, owner of ACM Basement Waterproofing in Islip, New York, recommended. Detecting issues early can prevent much larger (and more expensive) repairs down the road.
» RELATED: Home maintenance checklist
What does a home warranty cover, and what does it exclude?
Home warranty coverage varies by plan, according to Wagner. But most contracts follow similar patterns for what they will and won’t pay to repair or replace. Here’s what you can expect:
| Often covered | Often excluded |
|---|---|
| Central HVAC systems and water heaters | Preexisting conditions and unknown maintenance histories |
| Interior electrical systems and plumbing lines | Improper installation, faulty workmanship or code violations |
| Refrigerators, ranges, built-in microwaves and dishwashers | Cosmetic defects (e.g., scratches or dents) |
| Washing machines and dryers | Structural components (e.g., foundation cracks, walls or windows) |
| Garage door mechanisms and ceiling fans | Damage from lack of routine maintenance |
Always read the fine print
The exclusions list shows why you must read the fine print carefully. “Some warranty plans will cover, say, sump pump breakdowns but not sump pump backups caused by drainage issues,” McAlpin warned. Even when a plan covers specific equipment, it might not cover the underlying problem causing the failure.
Pro tip
“Ask providers which components they cover for each system before signing to avoid surprise out-of-pocket costs. Wagner learned the importance of this the hard way. “I bought a home with a home warranty that covered the garage door,” he said. “However, when the garage door opener failed, specific parts to the opener weren’t covered.”
» RELATED: Garage door replacement costs
How to choose the right home warranty company
“A home warranty is only as strong as the company’s ability to dispatch timely service and honor its contractual obligations without unnecessary barriers,” Alston emphasized.
Wagner cautioned that home warranty companies can be aggressive sellers. “They’ll bombard you once you show interest,” he said. “However, in shopping around, you can compare providers and have more leverage.” To choose the right home warranty company, experts recommend taking these steps:
- Verify the plan covers your most essential systems and appliances. Then, compare coverage limits, exclusions and waiting periods across providers.
- Calculate total costs, including annual premiums and per-visit service fees.
- Review response times and the claims-filing process to get a feel for how quickly you’ll get help.
- See if you can choose your own contractors or must use the company’s network.
- Read customer reviews on ConsumerAffairs for complaints about denied claims, delays or poor workmanship.
- Check if the warranty caps the number of claims you can file per year or per system.
- Ask about the average contractor response time and whether technicians are available on weekends or evenings.
- Confirm you’ll get a replacement if something isn’t fixable.
- Find out if there’s a waiting period before coverage starts and which items might have longer waiting periods.
- Get all promises in writing before signing a contract.
How much does a home warranty cost?
Home warranty costs vary by company and the amount of coverage. “They can be as low as a couple of hundred dollars and go up to a couple of thousand,” Wagner said. But most plans range from $350 to $900 annually, or $30 to $90 per month.
Alston highlighted that while the annual premium is the most visible cost, multiple repair calls (and therefore, service fees) add up quickly. So compare premiums and per-visit fees across providers to calculate the true value, especially if your home has aging systems that may need frequent repairs.
Home warranty cost factors
The total cost of a home warranty depends on the following factors:
- Coverage level: Comprehensive plans covering both systems and appliances cost more than appliance-only plans.
- Service fees: You’ll pay $75 to $150 per technician visit (as outlined in your contract).
- Home size: Larger homes may face higher premiums, as they generally have more appliances and systems to cover.
- Home age: Older properties may also come with higher warranty costs, as they’re at higher risk of system and appliance failures.
- Optional add-ons: Items such as pools or specialty items require extra coverage at additional cost.
- Contract length: Some providers offer discounts for multi-year contracts versus month-to-month plans.
- Coverage limits: Plans with higher caps on repair payouts may cost more upfront but offer better protection for expensive failures.
- Location: Homes in areas with higher labor costs or extreme weather conditions may have steeper premiums.
FAQ
What should I look for in a home warranty contract?
When reviewing a home warranty contract, focus on coverage details, exclusions and fees. Check what’s covered and excluded, understand your service fee per visit and review how the claims process works. Pay attention to coverage caps that limit how much the company pays per repair.
How do I file a claim with a home warranty provider?
To file a claim, contact your warranty provider by phone or online portal as soon as something breaks down. Describe the problem and pay your service fee. The company will then send a technician to diagnose the issue and submit findings to the warranty company for approval before repairs begin.
What happens if a repair exceeds the coverage limit?
If a repair exceeds the coverage limit, you’ll pay the difference out of pocket. For instance, if your water heater replacement costs $2,000 but your plan caps coverage at $1,500, you’re responsible for the remaining $500.
Are home warranties transferable to new owners?
Yes, many home warranties transfer to new owners with proper notification to the company before closing. The process usually involves a transfer fee, and the new owner gets coverage for the remaining contract term with an option to renew.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- California Department of Insurance, “Home Protection Contracts.” Accessed Dec. 4, 2025.
- Insurance Information Institute, “What is covered by standard homeowners insurance?” Accessed Dec. 4, 2025.
- Federal Trade Commission, “So what’s the deal with ‘home warranties'?’” Accessed Dec. 4, 2025.
- Federal Trade Commission, “Warranties for New Homes.” Accessed Dec. 4, 2025.
