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Carter Gaddis is a senior writer at USA TODAY Homefront. He is an experienced journalist who has written about roofing, sunrooms, title insurance and other home service topics. Carter has contributed to the TODAY SHOW parenting section, CBS SPORTS and ESPN, among other publications. He lives with his family in Central Florida, where he spends most weekends at theme parks or watching English soccer on TV.
A home warranty provides money to repair or replace broken appliances and home systems.
The value comes from paying less in premiums and fees than for repairs or replacement.
When shopping for home warranties, look for reliable service — not just low costs.
Home warranties aren’t a fit for every homeowner but can be worth it under the right circumstances. What are those circumstances, exactly?
A home warranty might be right for you if your appliances are no longer covered by manufacturer’s warranties and you would rather not save money in an emergency fund.
It might also be an option if your air conditioning or heating systems are more than a few years old and work extra hard to keep your home comfortable under extreme weather conditions.
Naturally, you’ll want to choose the most reliable home warranty provider you can. Begin your research into whether a home warranty is worth it by learning about what it is, what it costs and how it works.
A home warranty is a service contract between a homeowner and a provider that covers some or all of the cost to repair or replace appliances or systems, such as HVAC or plumbing. It is intended to give you peace of mind when an unexpected breakdown occurs.
For a monthly or annual premium, a provider promises to reimburse a predefined amount of the replacement or repair costs. With most home warranty plans, the provider also assigns a technician to make the repair or determine if a replacement is needed.
Your responsibility as a homeowner includes making timely premium payments, paying a service call fee and understanding what is and is not covered by the home warranty’s terms and conditions.
Home warranties are not homeowners insurance, which covers the cost of home repairs due to damage related to weather, fire or other disasters. A home warranty covers only specific items or systems within the home, usually only in regular wear-and-tear cases.
The items covered by a home warranty depend on the provider and plan you select. Most home warranty providers offer plans that cover laundry and kitchen appliances, home systems or both.
Home appliances covered by most providers:
Depending on the company, certain components of your major appliances may not be covered or may require an optional add-on to receive coverage. This might include icemakers, handles, hinges, cabinet doors, latch assemblies and other components specified in your service contract.
Most providers offer plans that cover major systems, such as your HVAC system, plumbing and electrical.
Components that may be covered under a systems plan:
Because of the complexity of household systems, you should carefully read the exclusions in your coverage. For example, some companies might repair an AC compressor but only cover some refrigerant costs. Others might require additional coverage if access to your components is blocked by concrete or is otherwise difficult to reach.
Many providers also will not cover appliances or systems that were broken or stopped working before you signed the service agreement. Some will also assign a pro-rated value to older appliances, promising reimbursement based only on the item’s value when it fell out of repair.
Claims can be rejected if a technician determines that you have followed improper maintenance routines.
Add-on options give you flexibility in coverage. For example, some providers offer limited roof-leak repair as an add-on. In contrast, others will offer coverage for items such as sprinkler systems, septic systems, pool and spa maintenance and separate freezers for an additional charge.
According to our survey of 1,000 homeowners in November 2023, 75% of respondents purchased plans that covered appliances and major systems. The other 25% selected either an appliance-only or a systems-only plan.
The survey also showed that 49% of homeowners who bought a home warranty chose to include at least one optional add-on. The most common add-ons were roof-leak repair and septic coverage.
Filing a claim should be as simple as following the steps laid out by your provider in your service agreement. Most providers offer an online claims portal that allows you to make reports 24 hours a day.
Other providers require a phone call or an email to notify them about a claim. No matter how your provider wants you to file a claim, it’s important to do it as soon as possible after discovering a breakdown.
Pierce Haley, Esq., executive director of the National Home Service Contract Association, recommends taking a photo of the broken item, including the model number.
When you file your claim, be prepared to provide maintenance records and the original purchase receipt, if you have it. Write down a description of the problem so you can explain it in detail on the phone or to a technician.
When you reach your provider, your claim will be evaluated and accepted or rejected. In our survey, 89% reported that their provider had approved their most recent claim.
If your claim is accepted, your provider will assign a technician. You will schedule an appointment for them to evaluate the condition of your appliance or system to determine if it can be repaired or must be replaced.
Our survey also revealed that the average repair or replacement job was completed within 21 days.
Regardless of the length of your term, the cost of a home warranty is determined by the premiums you pay, service call fees, optional add-ons you choose, and any additional fees or surcharges.
Most home warranties run for 12 months, although many companies offer multiyear contracts. Some companies extend the length of a contract by a few months if you pay annual, rather than monthly, premiums.
Your cost is also influenced by your geographical location, your home’s size and your chosen coverage plan. Most providers charge more for homes larger than 5,000 square feet.
Most companies provide payment structures that allow for monthly or annual payments. We analyzed the price of premiums for nine of the leading home warranty providers and found that they charged a national average of $59 for monthly premiums and $703 for annual premiums.
Here are two charts displaying the monthly and annual premiums for the nine providers we reviewed and the national averages.
We also researched service call fees for nine leading providers and found that the average was $99. The chart below displays the average service call fees each provider charges, ranging from $75 to $125.
Home warranty companies offering a range of service call fees charge less per month in exchange for higher premiums. For example, American Home Shield charges $20 per month for its lowest-priced plan with a $125 service call fee. Its monthly premium on the same plan is $30 per month with a service call fee of $100.
One of the biggest determining factors in a home warranty value is whether the anticipated life span of your kitchen appliances and major systems warrants the extra financial protection a home services contract provides.
Closely related are the dollar limits, or coverage caps, offered by your home warranty provider. A coverage cap is the most the provider will reimburse you for home repairs or replacement of defective items.
Coverage caps range from $150 to unlimited annual coverage, depending on the provider. Some providers limit the amount they’ll reimburse during the first few months of your term and then expand the coverage cap for the duration of your agreement.
Below is a list of appliance and system life expectancies and replacement costs. Life expectancy data is from the International Association of Certified Home Inspectors. Appliance replacement costs reflect the ranges of listed retail prices for five major manufacturers: GE, LG, Maytag, Samsung and Whirlpool. System replacement costs reflect Home Depot pricing.
Three factors should dictate your decision to purchase a home warranty: your coverage needs, your budget and the services offered by the best home warranty companies.
List your home's most-used appliances and major systems. Determine whether a manufacturer’s warranty covers them. If so, find out how much time is left on the agreement.
If your appliances or home systems are out of warranty, consider how much it might cost to repair or replace them without a warranty. Sometimes, a home warranty’s annual premium may be higher than the cost to repair or replace a failed appliance.
As you analyze your finances, determine how much you can pay in monthly or annual premiums. Contrast that with how much you would need to pay out of pocket for a technician to fix a broken item or how much a new appliance or system component would cost.
Once you’ve determined the items or systems that need coverage and how much you can afford, request provider quotes. Most home warranty companies offer estimates on their websites.
You’ll usually receive a quote immediately, but some companies require an email or phone call with a sales representative.
Be prepared to ask questions if you intend to speak with a sales representative. Keep in mind that the person or people you speak with before you sign up are not necessarily the same people you would deal with if you file a claim.
In addition to asking about cost, consider these coverage questions:
As you research, check the provider’s Better Business Bureau (BBB) page. Look for any BBB consumer alerts, such as a change in the company’s rating or accreditation. Also check the customer comments for patterns of complaints, such as slow response times or frequent claims rejections.
Most home warranty providers give you access to a sample service agreement on their websites. If you can’t find one, ask a salesperson to provide it.
The sample contract won’t necessarily provide specific details about your service agreement, but the fine print should reveal exclusions, potential penalties, mediation requirements and other legal aspects of your contract.
As you explore the sample contract, pay attention to the following sections.
This section outlines coverage for specific appliances and plumbing, HVAC and electrical systems. It should also list excluded items related to the appliances or systems covered, such as duplicate appliances, HVAC drain lines or AC refrigerant. Coverage caps should also include any aggregate dollar limits the service provider stipulates.
Every home warranty company offers add-ons for an extra cost. This might include an HVAC tune-up, coverage for lawn sprinklers or limited roof leaks.
This question-and-answer section lays out the contract’s terms, including length, how to file a claim, cancellation policies and service fees.
This section details legal terms about issues such as conflict resolution, costs that are not covered and state-specific regulatory information.
Home warranty companies build their reputations on prompt, honest communication and reliable service. If you find that a sales representative is slow to respond to a question, it should raise a red flag about the company’s commitment to customer service.
Dottie Herman, vice chair and former CEO of Douglas Elliman Real Estate, pointed out a few red flags to stay alert for when dealing with a home warranty company.
“The company takes a long time to get back to you and it becomes difficult to arrange a service call,” Herman said. “They could say an appliance doesn’t need to be replaced when it actually is on its last legs. The warranty company could replace your aging high-end brand with a cheaper model.”
Other potential home warranty red flags include the following:
It’s a major headache when your appliances or home systems break down. A home warranty can give you peace of mind when you need unexpected repairs.
To that end, an argument can be made that a home warranty is worth it. Just be sure to research coverage options, analyze your budget and choose a provider that offers the best, most reliable service.
We recommend that you request at least three quotes from reputable home warranty companies before making a decision.
Editorial note: The name “Homefront” refers to the alliance between USA TODAY and Home Solutions that publishes review, comparison, and informational articles designed to help USA TODAY readers make smarter purchasing and investment decisions about their home. Under the alliance, Homefront provides and publishes research and articles about home service and home improvement topics.
Homefront has an affiliate disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Homefront editorial staff alone (see About Homefront). Homefront adheres to strict editorial integrity standards. The information is believed to be accurate as of the publish date, but always check the provider’s website for the most current information.
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