What is a home warranty?
A home warranty is a service contract that helps pay for the repair or replacement of certain home systems and appliances when they break down due to normal wear and tear.
These plans usually run for a year at a time and can be renewed. They’re optional, but the appeal is simple: instead of paying the full cost of a repair out of pocket, you may only need to pay a service fee. Then the warranty provider covers the rest for eligible claims, up to plan limits.
What does a home warranty cover?
Most plans fall into two buckets: major home systems and home appliances. Coverage can be “systems-only,” “appliances-only,” or a combined plan, depending on the provider.
Major home systems
Here are some of the common home systems included in a home warranty:
- HVAC (heating and cooling)
- Electrical systems
- Plumbing systems
- Water heaters
Home appliances
Home warranties usually cover certain larger home appliances, such as:
- Refrigerators
- Ovens and stoves
- Dishwashers
- Washers and dryers
- Built-in microwaves
Coverage details can be surprisingly specific. Your service agreement is the final word on what counts as covered.
What home warranties don’t cover
A home warranty is helpful, but it’s not designed to cover everything. Common exclusions include:
- Pre-existing conditions: Issues that show up in inspections or disclosures before you move in likely won’t qualify.
- Improper installation or poor maintenance: If you DIY installed a new dryer and didn’t vent it properly, for instance, any resulting damage might not be covered.
- Cosmetic problems: A dent or scratch on your stove likely won’t be covered by your home warranty as long as the appliance is still functional.
- Structural issues: Home warranties generally cover systems and appliances, not larger problems with the home itself, like the foundation.
- Damage from natural disasters: If your home is damaged by a flood, hurricane or fire, that usually falls under the purview of homeowners insurance.
How a home warranty works, step-by-step
Here’s how a home warranty works in practice:
- A system or appliance covered by your home warranty fails from normal use.
- You submit a service request to your warranty company.
- The company sends a technician (often from its network) to diagnose the issue.
- You pay a service fee (similar to a copay at the doctor’s office).
- If the claim is approved, the warranty company pays for the repair or replacement, up to the plan’s limits.
A practical detail to know: even if an item is replaced, the replacement may not match your original brand, color or size, and plans often include coverage limits that can leave you paying the difference.
Before you buy, read the plan’s coverage limits (the max it will pay per item) and the “not covered” list. Those two sections usually determine whether a plan will cause more headaches than it’s worth, so it’s a good idea to read them carefully.
Cost of a home warranty
Costs can vary based on the provider, location and coverage level, but here’s a baseline to keep in mind:
| Feature | Cost |
|---|---|
Annual premium | Often $300–$700 per year |
Service call fee | Often $75–$125 per visit |
Optional add-ons | Can add $40–$200+ per year, depending on what you include (think pool equipment, extra appliances, or specialized coverage) |
Who might benefit from a home warranty?
A home warranty can be especially appealing if you:
- Are a first-time homeowner getting used to the reality of home repairs
- Bought an older home with aging systems and appliances
- Don’t have a big emergency fund for home repairs yet
- Are selling a home and want to provide an extra perk that can help to reassure buyers
Home warranty vs. homeowners insurance
It can be easy to confuse home warranties and homeowners insurance—after all, they both protect your property and help you avoid paying out of pocket when something in your home is damaged. But they’re two different products, and many homeowners use both.
Here’s a quick look at some of the key differences:
| Home warranty | Homeowners insurance |
|---|---|
Usually optional | Often required by mortgage lenders |
Covers repairs or replacement for certain appliances and major home systems due to normal wear and tear | Covers damage from unexpected events like fire, storms or theft |
Designed for normal wear and tear | Designed for disasters and major property losses |
Choosing the right home warranty
Before you pick a plan, it helps to:
- Compare coverage limits and exclusions: Pricey systems and appliances, like HVAC or some kitchen amenities, might not be covered at all, or the coverage limit might not offset the cost of a repair.
- Check what requires add-ons: Does the policy cover roof leak repair? If your house runs on septic or has well water, does that require an add-on? Do you have a pool or specialty appliances that might need additional coverage?
- Read reviews with a specific lens: Online reviews can help you gauge response time, technician quality and how fairly claims are handled.
- Understand the service fee: How much is the service fee? How often do you need to pay it?
