Home-Warranty 101: Everything You Need to Know Before You Buy

By: Brian LaValle   | Edited by Warren T. Guy  | Updated: April 28, 2025 | 2 min. read

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https://www.thehomewarrantyguide.com/home-warranty-101

Owning a home is rewarding—but when the A/C quits in July, the rewards disappear fast. A home-warranty plan can soften those surprise bills, yet many homeowners aren’t sure how these contracts work or whether they’re worth it. This article answers the big questions so you can decide with confidence.

1. Home Warranty vs. Homeowners Insurance

	Home Warranty	Homeowners Insurance
What it covers	Breakdowns of appliances & systems from normal wear	Catastrophic events—fire, theft, storms, liability
Term	Generally 12 months, renewable	Usually annual, tied to your mortgage
Cost trigger	You file a service request	You file a claim for covered peril
Out-of-pocket	Flat service fee ($75–$125) per visit	Deductible you choose when you buy the policy

2. How a Home Warranty Works

1. Submit a service request online or by phone.

2. Provider dispatches a local tech (or, with some plans, you choose your own).

3. Repair or replacement is completed per contract terms.

4. You pay the service fee—the provider picks up the rest, up to coverage caps.

3. What’s Typically Covered

Item	Usually ✅	Sometimes ⚠️	Rarely ❌
HVAC (heating & A/C)	✅
Plumbing & electrical systems	✅
Kitchen appliances	✅
Laundry appliances	✅
Water heater	✅
Pool / Spa equipment		⚠️
Roof leaks		⚠️
Solar panels			❌
Septic tank			❌

(Coverage varies by provider—always read the fine print.)

4. What a Home Warranty Does Not Cover

• Structural elements: walls, foundations, windows, flooring

• Cosmetic issues: dents, scratches, trim pieces

• Pre-existing problems or code violations

• Damage caused by neglect, misuse, or natural disasters

• Outdoor equipment and landscaping

5. Cost Snapshot for 2025

Expense Type	Typical Range
Monthly premium	$35 – $75
Annual premium	$400 – $900+
Service fee per claim	$75 – $125

Want deeper numbers? See our full 2025 Home-Warranty Cost Guide for state-by-state pricing, add-on fees, and provider comparisons.

6. Pros & Cons at a Glance

✅ Pros	❌ Cons
Budget predictability	Not every breakdown is fully covered
One call for vetted techs	Coverage caps may leave gaps
Adds resale value	Service fee at each visit
Peace of mind for older systems	Must follow provider process

7. Is a Home Warranty Worth It for You?

Consider a plan if:

• Your systems/appliances are aging out of manufacturer coverage

• You’d rather pay predictable premiums than risk a four-figure repair

• You don’t have a trusted contractor network

You might skip it if:

• Your home is new construction with builder warranties intact

• You maintain a robust emergency fund and prefer DIY solutions

8. Before You Buy—A Quick Checklist

1. Compare premiums + service fees—use the Cost Guide benchmarks.

2. Confirm coverage caps, especially on HVAC and refrigerators.

3. Check provider complaint volume with consumer-protection sites.

4. Verify technician network in your ZIP code.

5. Read cancellation terms for refunds and early exit fees.

   
   
   
   

Ready to evaluate specific companies? Head over to our upcoming Top 10 Home Warranty Companies – 2025 list for real-time quotes.

Bottom Line

A home warranty can turn a budget-busting repair into a predictable fee—if the coverage fits your home and your risk tolerance. Use this guide, keep your maintenance records handy, and you’ll be set to decide whether a plan makes sense for you. Still have questions? Read our full Home Warranty 101 section.