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How to Buy a Home Warranty (2022 Guide)

Learn about all the essential steps involved with purchasing a home warranty with our detailed guide on how to buy a home warranty.

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If you are a homeowner or looking to buy a home, you know there are big-ticket items that might cost a fortune to repair or replace. Major home systems like electrical, HVAC, and plumbing will eventually malfunction from regular use. In addition, major appliances like your refrigerator and washer will experience normal wear and tear over the years. However, you do not have to break the bank to repair or replace these items.

A home warranty plan helps you make only one call to get a vetted and certified contractor to your home, as well as provide financial peace of mind about repair costs. The This Old House Reviews Team has researched the best home warranties in the United States. We have listened to customer service calls, interviewed experts in the industry, and conducted analysis over customer reviews. Read this guide to learn how to buy a home warranty and what factors to consider.

What is a Home Warranty Plan?

A home warranty is a contract between you and a company that covers repair costs on selected items in and around your home. Home warranties cover breakdowns due to routine wear and tear, but any damage or malfunction due to neglect, misuse, or natural disasters are typically not covered. In many instances, a home warranty company also helps provide a vetted and trustworthy repair technician for you.

Reasons to Get a Home Warranty

If you are debating whether or not a home warranty is worth it or not, consider that you can’t predict when your home systems or appliances will fail. A home warranty provides peace of mind if your home’s systems or appliances fail. It also prevents you from spending hours searching for a trusted local contractor.

If you’re purchasing a new home, a home warranty might not be necessary. The home will come with brand new appliances and systems covered by a manufacturer’s warranty. A manufacturer’s warranty protects appliances if they fail due to defective materials or faulty installation.

However, manufacturer’s warranties typically only last for a year or two. They also don’t cover systems and appliances that break down due to normal wear and tear.

We recommend you purchase a home warranty if:

  • You want to limit the amount you pay out of pocket for repairs or replacements of home systems and appliances.
  • You own an older home.
  • You’re a first-time homebuyer and want protection for all of your systems and appliances.
  • You’re planning on selling your home and want to entice potential buyers.
  • You’re new to an area and don’t know any local repair technicians.

How to Buy a Home Warranty

If you fulfill the criteria above and want more peace of mind, there are a few crucial steps to take and factors to consider when buying a home warranty for your home. Here are some significant factors to weigh and steps to take:

  • Determine the type of plan you want—Some providers organize their plans based on the number of items covered under each plan, while others divide coverage by the type of items, such as systems or appliances. Take note of the items you have in your home and weigh your coverage options before buying a plan.
  • Read sample contracts—There is a lot of fine print involved with home warranties. An effective measure to take is to read sample home warranty contracts from each provider you are considering closely. This step lets you see what limitations they include and what exact coverage you will receive.
  • Look at coverage caps—Sometimes, a home warranty company places coverage caps on certain appliances or systems. This amount tends to cover repair costs, but it may not be enough for an entire replacement. For example, if there’s a $2,000 coverage cap on your electrical system, you are responsible for paying any amount past that amount.
  • Think about pricing—If you’re on a budget, there are plans below $50 a month that will suit your needs. Many companies let you pay monthly to make plans slightly more affordable if you cannot pay a hefty upfront fee. Also, pay attention to what service call fee and deductible you receive, as you will pay these every time.
  • Consider customer service—Customer service is crucial to home warranties. If an item or system breaks down, you’ll want a responsive and helpful customer service team to help you get it fixed. The best home warranty companies offer 24/7 customer service, and they also have an online portal or app where you can easily file claims.
  • Research the company’s reputation—When searching for a provider, look for one that has at least a B rating from the Better Business Bureau (BBB). Read other third-party customer reviews, such as Yelp and Google Reviews, to get a good idea of what it’s like to work with that home warranty company. If you are a home buyer, you might raise this topic to your real estate agent or mortgage lender to see their suggestions.
  • Gather quotes—We recommend obtaining at least three quotes from reputable home warranty providers. This way, you can closely compare providers, their service contracts, limitations, and cost.

What Does a Home Warranty Cover?

Home warranty coverage varies according to plans. Typically, a home warranty provider offers three plans: systems plans, appliance plans, and combo plans.

  • System plans cover essential home systems like your air conditioning, heating, ductwork, HVAC, plumbing, water heater, garbage disposal, smoke detectors, ceiling fans, and doorbells.
  • Appliance plans cover common home appliances like your refrigerator, dishwasher, range, oven, stove, built-in microwave, washer and dryer, garage door opener, and freestanding ice makers.
  • Combo plans cover both systems and appliances. This plan tends to be the most popular option, and home warranty companies often include extra perks with their combination plans.

Sometimes, home warranty companies also offer custom plans in which you mix and match items to your preferences and needs. Many providers also provide add-on coverage for miscellaneous items. This coverage includes items such as your pool, hot tub, spa, or second refrigerator. You add these items to your plan for an extra cost per month.

What Does a Home Warranty Not Cover?

Home warranties do not cover all home repairs. Here are some of the most common exclusions and limitations home warranty providers add to the contracts:

  • Pre-existing conditions at the time a home warranty begins
  • Damage caused by the improper installation or maintenance
  • Misuse of an appliance or system by using it for purposes other than residential use
  • Cosmetic issues
  • Internet-based components of an appliance

We recommend you find out the specific exclusions from a provider by asking a representative or looking for coverage limitations in a sample contract. In addition to excluded repair causes, a home warranty company may set limits on pay-outs for specific systems and appliances. Once you reach this limit, you’ll be required to pay any extra costs out of pocket.

Home warranties also do not cover issues caused by environmental hazards, like fires or flooding, and acts like theft and vandalism. Your home insurance policy works to cover these issues.

Recommended Home Warranty Companies

Now that you know how to buy a home warranty, consider the following providers. We recommend getting a quote from all three providers as they are all highly reputable and feature a wide availability.

  • American Home Shield: With more than 45 years of experience, American Home Shield (AHS) is one of the most trusted providers in the home warranty industry. The company provides generous coverage caps and offers comprehensive coverage plans. AHS lets you choose between a $75, $100, and $125 service fee, too. The company does not service Alaska, though.
  • Choice Home Warranty: If you want a basic plan that already covers both appliances and systems, we encourage you to look into Choice Home Warranty (CHW). Choice also does not deny coverage based on the age of your home or your systems or appliances. This perk makes the provider ideal for older homes. Choice’s plans cost between $36–$44 per month. Unfortunately, Choice is not available in Oklahoma or Washington.

Select Home Warranty: Select Home Warranty provides ​​unique offerings and low premiums. Its unique offerings include free roof coverage, seasonal promotions, and distinct systems & appliances plans. Select’s plans cost around $41–$47 per month. The provider is not in Nevada, New Mexico, Washington, and Wyoming.

Our Home Warranty Review Methodology: How We Chose The Best Home Warranty Companies

The This Old House Reviews Team is committed to providing comprehensive and unbiased reviews to our readers. This means earning your trust through transparency and having the data to back up our ratings and recommendations. With that in mind, we spent time creating an objective rating system to score each home warranty company. Here’s what that review process looks like:

  • We call every home warranty provider, talking to sales agents and company representatives. We get quotes, ask questions, and fully understand the protection plan offerings.
  • We test the customer service, including factors such as wait times, friendliness, and problem-solving ability.
  • We analyze the sample contracts from each brand we review. This allows us to break down the industry jargon and see what is and isn’t covered so we can give readers straightforward information.
  • We update all of this information on a continuous basis, storing it in a proprietary database that allows us to compare dozens of home warranty companies against each other.

With all of that data, we created a rating system to score each home warranty company. Our rating system is a weighted, 100-point scale on the following factors:

  • Plan options (25): Every home and every family needs the right home warranty plan for them. Providers with more options and more flexibility were rated higher than those without.
  • Coverage specifics (5): What does each plan and each provider cover? The more covered by the provider in their basic plans, the higher the score.
  • Pricing (25): Both the monthly fee and the service fee play an important role in the selection process.
  • Trustworthiness (25): There are a number of home warranty companies that aren’t reputable and don’t follow through on their agreements. We gauged trustworthiness based on customer feedback from the BBB.
  • State availability (5): Where you live plays a role in the options you have for a home warranty. Companies scored higher if they covered more states than their competitors.
  • Customer service (10): This factor is based on our own research from calling providers, as well as their guarantees for responding to claims.
  • Additional benefits (5): Some home warranty companies offer special promotions or will cover items in their plans that are usually considered optional coverage for most companies. Home warranty companies that offer these types of benefits were scored higher than competitors that didn’t.

In summary, the This Old House Review Team reviewed 45 companies to select this list of the seven best home warranty providers. To keep our ratings and data current, we have a full-time researcher who collects (and regularly updates) more than 100 specific data points from each company to help us compare them on key factors such as coverage, cost, service, and dependability.

To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.