A home warranty is a contract that covers the service, repair, or replacement of major home systems and appliances. Think of a home warranty as a safeguard for when things go wrong with your home’s appliances and systems. A home warranty plan lets you make one phone call or request rather than taking the time and effort to research local contractors for home repairs.
The This Old House Reviews team has performed in-depth research over the best home warranty companies, including listening to their service calls, interviewing experts in the industry, and conducting thorough analysis over customer reviews. There is a lot of jargon and terminology involved with home warranties, so we recommend you read this guide to better prepare you for contacting home warranty providers.
What is a Home Warranty Plan?
A home warranty is a service contract between you and a provider 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.
How Does a Home Warranty Work?
After you purchase a home warranty, coverage typically starts within 30 days after your first payment. If a covered item or system breaks down while under warranty, you file a claim or service request with your provider and get the issue addressed.
If you are currently purchasing a home, you may be able to roll your home warranty into your mortgage payments. Bring this up with your mortgage lender to confirm with your home warranty company if this is possible.
Overall, the process of using a home warranty looks like this:
- First, a covered appliance or system breaks down due to wear and tear.
- Then, you call your home warranty provider to file a claim or submit a claim online.
- The home warranty company processes the service request. Once processed, the company will send a technician to your home. This step occurs within 48 hours on average.
- The technician observes the system or appliance at your home and recommends a repair or replacement. At this time, you pay the set service call fee stated in your home warranty contract.
- If the repair is minor enough and the contractor has the necessary parts, they can repair it right then and there. However, if an entire replacement is needed, the technician will schedule a follow-up appointment.
- Once the repair or replacement is complete, you can enjoy your newly functioning system or appliance with peace of mind and get back to business as usual.
What Does a Home Warranty Cover?
Home warranty coverage varies according to plans. Typically, a provider offers three types of home warranty plans: systems plans, appliance plans, and combination plans.
- System plans cover major home systems like your air conditioning, heating, ductwork, HVAC, plumbing, water heater, garbage disposal, smoke detectors, ceiling fans, and doorbells.
- Appliance plans cover most appliances like your refrigerator, dishwasher, range, oven, stove, built-in microwave, clothes 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.
Some home warranty companies offer custom plans where you mix and match items you want to be covered. Many providers also provide optional coverage for miscellaneous items, such as your pool, hot tub, spa, or second refrigerator. Customers add these items to their plan for an additional cost per month.
What Does a Home Warranty Not Cover?
It is important to note that home warranties do not cover all repairs. We have listed below 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 that limit is reached, you’ll be required to pay any extra costs out of pocket.
How is a Home Warranty Different from Home Insurance?
While both a home warranty contract and a home insurance policy function similarly, they vary significantly by their offerings. A home warranty is an optional policy that helps cover the costs of general breakdowns from wear and tear to your home’s systems or appliances. Homeowners insurance, however, is a mandatory policy.
Learn further details between home warranties and home insurance plans with this chart:
|Issue||Home Warranty||Home Insurance|
|Your appliances are damaged due to a surge caused by lightning.||-||✓|
|An air conditioning system begins blowing warm air during operation.||✓||-|
|Hot water isn’t running because your water heater has broken down.||✓||-|
|A fire breaks out, leaving a few appliances inoperable.||-||✓|
|The structure of your home shows signs of damage.||-||✓|
|Due to age and normal wear and tear, the washer and dryer begin malfunctioning.||✓||-|
How to Get a Home Warranty
If you have decided that a home warranty is worth it, there are a few factors to consider when considering the best possible protection plan 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.
- 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 to see what suggestions they have.
Recommended Home Warranty Companies
Consider the following companies if you’re ready to buy a home warranty plan. We recommend getting a quote from both providers. This way, you can closely compare your options and negotiate better deals.
- American Home Shield: With more than 45 years of experience, American Home Shield (AHS) is one of the most trusted companies in the industry and our top pick. The company provides generous coverage caps and offers comprehensive coverage plans. AHS lets you choose between a $75, $100, and $125 service fee, too.
- Select Home Warranty: Select Home Warranty provides unique offerings and low premiums. Some of these unique offerings include free roof leak coverage, seasonal promotions, and distinct systems & appliances plans. Select’s plans tend to cost around $41–$47 per month. The company does not service Nevada, New Mexico, Washington, and Wyoming.
Our Rating Methodology
The This Old House Reviews Team backs up our home warranty ratings and recommendations with a detailed rating methodology to objectively score each provider. We conduct research by speaking with company representatives, requesting quotes, analyzing sample contracts from each company, and conducting focus groups and consumer surveys. We then score each provider against our review standards for coverage, value, trustworthiness and transparency, availability, and customer service to arrive at a final score out of 100.
To share feedback or ask a question about this article, send a note to our Reviews Team at firstname.lastname@example.org.