When a covered item stops working, file a claim online or by phone, pay a service fee, and a technician will handle the repair.
Jump to insightHome warranty plans usually cover essential systems and appliances, with optional add-ons available.
Jump to insightHome warranties cover wear-and-tear breakdowns, while home insurance covers damage from disasters.
Jump to insightHome warranty plans typically cost between $350 and $900 per year of coverage.
Jump to insightHow a home warranty works
So, something broke. Now what? These are the steps that most homeowners take.
1. File a claim
When a covered system or appliance fails, you file a claim through your home warranty company’s website or by phone. “It takes a few clicks to get a qualified technician to your home,” said Gina McCort, vice president of sales at home warranty provider Cinch Home Services.
2. Pay a service fee
You’ll pay a service fee, and the company assigns a technician from its network to diagnose the problem, Morgan Torres, a real estate agent with Stewart and Jane Group in College Station, Texas, explained. The technician inspects the issue and reports their findings back to the warranty company, which then decides whether the breakdown is covered under your contract.
3. Get a repair or replacement
If approved, the company handles the repair or replacement up to your plan’s coverage limits. McCort pointed to one family that experienced a $6,500 AC issue during a heat wave. They got a warranty at closing, so their only cost was the service fee (typically $75 to $150).
What a home warranty covers
Most home warranty plans cover the major systems and appliances you use daily. “Remember PEACH — plumbing, electrical, appliances, cooling and heating,” said McCort. This usually includes your HVAC system, water heater, dishwasher, microwave and oven.
Most home warranty plans last for one year.
Torres noted that coverage often applies only to internal parts and components. “So if a handle or knob breaks off, it’s less likely to be covered,” she explained.
Beyond the basics, you can add optional coverage for items like pools, spas, septic systems, well pumps and additional appliances. “What I see my clients adding on the most is additional coverage for their sprinkler system, kitchen refrigerator (especially if it has an ice maker), HVAC and washer and dryer,” Torres said.
Examples of covered appliances
Nearly all basic plans include the following kitchen appliances:
- Dishwasher
- Built-in microwave
- Garbage disposal
- Oven/stove/range
- Refrigerator (sometimes standard, sometimes an add-on)
Washers and dryers are included in some base plans or are available as add-ons, depending on your coverage level.
What home warranties won’t cover
Warranties also commonly exclude countertop microwaves, cosmetic damage and high-end models, such as smart refrigerators or commercial-grade appliances.
Standard plans cover breakdowns from normal wear and tear. But they won’t cover preexisting conditions, improper maintenance or structural components, such as your foundation, walls and windows. Items still under a manufacturer’s warranty typically aren’t covered, either.
Did you know?
Most warranties cap how much they pay for repairs (e.g., no more than $1,000 for a dishwasher). McCort emphasized the importance of reviewing your contract, since coverage limits and exclusions can differ by region, company and plan.
» LEARN: How to read a home warranty contract
Home warranty vs. homeowners insurance
People often confuse home warranties and homeowners insurance, but they serve different purposes. Insurance protects your home's structure and belongings from disasters, while a warranty handles the everyday system and appliance failures that insurance won’t touch.
“Your homeowners insurance covers damage to your home's structure and contents (from extreme weather, natural disasters or theft),” Torres explained.
A home warranty, on the other hand, covers the mechanical breakdowns that happen from regular use — your AC wearing out, your dishwasher giving up or your water heater failing.
“Breakdowns are far more common than insurable events, which is why many homeowners tend to use their warranty more,” said McCort.
| Home warranty | Home insurance | |
|---|---|---|
| What it covers | Repairs or replacement of essential systems and appliances | Home structure, personal belongings and liability for injuries on your property |
| Covered causes | Normal wear and tear | Fire, theft, storms, vandalism and other natural disasters |
| How it works | Pay an annual contract fee plus a service fee for each repair | Pay a premium; insurance covers damage minus your deductible |
| Is it required? | No | Yes, if you have a mortgage |
Do you need both?
Warranties and insurance can work together. Think about how old your home is and the condition of your appliances. If your house is over 10 years old and still has the original furnace or water heater, those systems could malfunction any time — making a warranty more practical. But if everything's newer and still covered by manufacturer warranties, you might not need it.
Home warranty costs
Home warranty costs vary. Most U.S. homeowners pay between $350 and $900 a year for coverage, but several factors influence what you’ll pay:
- Coverage level: Plans with wider protection cost more than bare-bones plans.
- Home size and age: Larger homes have more systems to cover, and older systems are more likely to fail.
- Location: Labor rates and cost of living affect pricing in different regions.
- Optional add-ons: Pools, spas and septic systems increase your annual cost.
- Service fee structure: Plans with lower service fees often have higher annual premiums, and vice versa.
Most companies offer at least three different plan levels. This way, “you can tailor coverage to your budget and usage needs,” McCort said. Shopping around among home warranty providers can reveal meaningful price differences for similar coverage levels. So, compare at least three quotes before committing.
How much coverage do I need?
When choosing your service fee level, consider how frequently you expect to file claims. If you have newer systems, opt for a higher service fee to lower your annual premium. But if your home has older equipment likely to need multiple repairs, a lower service fee saves you money each time you file a claim.
Are home warranties worth it?
Whether a home warranty makes sense for you comes down to three things:
- How old your home is
- What you can afford
- Whether you're comfortable handling repairs yourself.
When a warranty pays off, it really pays off — you’re looking at a $100 service fee instead of a $5,000 furnace replacement.
“The number one pro for having a home warranty is protection against unexpected expenses and the confidence of knowing who to call when something breaks,” McCort highlighted. Torres added that sellers often include warranties at closing, giving you a free first year to test the coverage.
Most warranties last for one year and renew unless you cancel. This gives you an annual checkpoint to evaluate whether the coverage is worth continuing, based on how much you’ve used it.
Pros and cons
Warranties aren't a good fit for every homeowner. Before committing to annual renewal, here's what to consider:
Pros
- Provides predictable costs and workmanship guarantees on repairs
- Helps if you’re not handy or on a fixed income
- Assigns vetted technicians for convenience
- Covers aging systems no longer under manufacturer warranties
Cons
- Requires service fees that add up with several claims
- Limits your control over technician choice
- May deny claims if your definition of "normal wear and tear" differs from theirs
- Costs money even if you never file a claim
Pro tip
Review the contract for coverage caps and exclusions before buying a home warranty. If a plan limits payouts to $1,000 per repair but your AC replacement costs $6,000, you could still face steep out-of-pocket expenses even with coverage.
FAQ
Is a home warranty required when buying a house?
No, a home warranty is optional when you buy a home. Your mortgage lender will require homeowners insurance, but a warranty is a separate product you can choose to get at any point. You can buy one before closing, have the seller include it as part of the deal or add coverage after you’ve moved in.
How long does a home warranty last?
Most home warranties last for one year and renew annually. You’ll need to decide each year whether to continue coverage based on how much value you’re getting from the plan. Some warranties for new construction homes may offer longer initial terms.
Can you choose your own repair technician?
Yes, some providers let you choose your own repair technician if you get approved first. But you’ll usually pay the difference between their network rate and your contractor's fee. Check your contract or call your provider to understand your options.
How do you cancel a home warranty?
To cancel a home warranty, first check your contract for the cancellation policy. Then, contact your provider through their website, phone or email. Ask about potential prorated refunds or cancellation fees, and keep records of your request and confirmation.
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. 6, 2025.
- Consumer Financial Protection Bureau, “What is homeowner's insurance? Why is homeowner's insurance required?” Accessed Dec. 6, 2025.
