Home Warranty 101
Owning a home can bring unexpected expenses—especially when major appliances or home systems break down. A home warranty offers valuable protection for your budget, providing peace of mind when unexpected repair costs arise. But how exactly does a home warranty work, what does it cover, and is it worth the cost?
Let's dive in!
What is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement costs of major home systems and appliances when they break down due to normal wear and tear or mechanical failures. Typically lasting one year, these warranties help homeowners avoid significant, unexpected repair bills.
Commonly covered items include:
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HVAC systems
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Plumbing systems
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Electrical systems
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Kitchen appliances (ovens, refrigerators, dishwashers, microwaves)
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Laundry appliances (washers and dryers)
Home Warranty vs. Home Insurance: What's the Difference?
Many homeowners confuse home warranties with homeowners insurance, but they serve different purposes:
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Home Warranty: Covers repairs or replacements of specific home systems and appliances due to regular usage or breakdowns.
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Home Insurance: Covers damage or loss due to events like fires, storms, theft, or accidents on your property. It does not cover regular maintenance or appliance/system breakdowns.
How Does a Home Warranty Work?
If a covered appliance or home system breaks down, here's the typical process:
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File a Service Request Claim:
Contact your warranty provider online or via phone, reporting the specific issue and the appliance or system affected. -
Schedule an Appointment:
The warranty provider assigns a local, third-party contractor to contact you and schedule a convenient time for repairs. Some providers allow you to select your own contractor. -
Repair or Replacement:
The technician diagnoses and repairs the issue. If the appliance or system can’t be repaired, the warranty company may replace it entirely. -
Pay Your Trade Call Fee:
You'll pay a predetermined service fee (usually between $75–$125), similar to an insurance deductible, each time you request service. If repairs cost less than your service fee, you'll pay only the actual repair amount.
What Does a Home Warranty Cover?
Home warranty coverage varies, but typically providers offer three types of plans:
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System Plans: Coverage for home systems like HVAC, plumbing, electrical, and ductwork.
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Appliance Plans: Coverage for appliances like refrigerators, ovens, dishwashers, washers, and dryers.
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Combination Plans: Comprehensive coverage for both systems and appliances.
Optional add-ons might include pools, spas, septic systems, and well pumps.
Coverage at a Glance: Here’s a quick visual guide to what's typically covered, sometimes covered, or rarely covered by home warranty providers.
Appliance/System | Usually Covered ✅ | Sometimes Covered ⚠️ | Rarely Covered ❌ |
|---|---|---|---|
Solar Panels | ❌ | ||
Septic Tank | ❌ | ||
Plumbing System | ✅ | ||
Electrical System | ✅ | ||
Well Pump | ❌ | ||
Sump Pump | ⚠️ | ||
Water Softener | ⚠️ | ||
Water Heater | ✅ | ||
Thermostats | ⚠️ | ||
Window AC Units | ⚠️ | ||
HVAC System | ✅ | ||
Dryer | ✅ | ||
Washing Machine | ✅ | ||
Dishwasher | ✅ | ||
Built-in Microwave | ✅ | ||
Oven/Range/Stove | ✅ | ||
Standalone Freezer | ⚠️ | ||
Refrigerator | ✅ |
System | Usually | Sometimes | Rarely |
|---|---|---|---|
What is Not Covered by a Home Warranty?
Home warranties typically do not cover:
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Structural elements (walls, windows, foundations, flooring)
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Cosmetic damage (scratches, dents)
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Pre-existing conditions (unless specifically stated otherwise)
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Improperly maintained appliances or systems
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Damage due to misuse or negligence
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Outdoor equipment and landscaping
The Benefits of a Home Warranty
Home warranties provide several important advantages:
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Peace of Mind:
You can rest easier knowing you're protected from unexpected repair costs, which is especially helpful for first-time homeowners or those on tight budgets. -
Fewer Unexpected Costs:
Instead of paying thousands of dollars for unexpected breakdowns, you typically pay only a modest trade call fee per incident, making home budgeting more predictable.
Home Warranty Cost
A typical home warranty plan costs $35–$75 per month, though some premium options can run $75–$90 or more depending on coverage. Most providers also charge a service fee (or deductible) each time you file a claim—commonly $70–$125. Your location, plan tier, and add-ons (such as pool/spa coverage or roof leak protection) can all affect the final price. For example, an older home with multiple systems may see higher monthly premiums or require more add-ons, while a smaller condo might pay on the lower end of the scale. Many companies also offer discounts if you pay annually instead of monthly, which can save you a few dollars each month.
Ready for a deeper breakdown of real-life monthly costs, service fees, and plan comparisons?
If you want more information, check out our comprehensive Cost Guide!
If you're ready to evaluate home warranties, you can jump to our Top 10 List of the best home warranty companies in America.
What to Consider Before Buying a Home Warranty
Before making your purchase, keep these key factors in mind:
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Not Everything is Covered:
Always read the fine print to fully understand what’s covered and what isn’t. -
Coverage Limits per Repair:
Providers often cap repair or replacement costs, so high-end appliances might not receive full replacement value. -
Current Customer Reviews:
Customer experiences vary widely. Carefully research companies through reviews, ratings, and testimonials to find a reliable, well-regarded provider.
The Bottom Line: Are Home Warranties Worth The Cost?
A home warranty is valuable depending on your financial situation, handyman skills, age and condition of appliances/systems, and tolerance for risk.
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If you’re a first-time homebuyer, or your home has aging appliances and systems, a warranty could save you thousands.
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Conversely, if your appliances are newer and under manufacturer’s warranty, or if you prefer handling repairs yourself, it may not offer as much value.
Consider this:
A water heater repair can cost nearly $1,000. With a home warranty, the same repair might cost only your trade fee of around $100.
Check out our Top 10 Warranty Providers