How To Buy a Home Warranty (2024 Guide)
If you’ve ever owned a home, you know major appliances and systems cost a fortune to repair or replace. However, with the right home warranty coverage, you can reduce out-of-pocket expenses and maintain your financial peace of mind.
Before purchasing a home warranty, you must understand essential details, such as coverage, fees, and typical exclusions. To help you get started, we researched the best home warranties, the home warranty buying process, and key consideration factors when shopping for coverage.
Did You Know?
- In the last 30 days, more than 2,500 people bought home warranties from the above providers. Liberty Home Guard is our most popular provider, with 55% of buyers choosing to cover their homes with an LHG plan.
What Is a Home Warranty Plan?
A home warranty is a contract between you and a company that covers repair costs on select items in and around your home. Home warranty policies cover breakdowns due to routine wear and tear. Any damage or malfunction due to neglect, misuse, or natural disasters is typically not covered. Often, a home warranty company also provides you with a vetted and trustworthy repair technician.
A common misconception is that home warranties and homeowners insurance offer the same protection. Angel Conlin, chief insurance and compliance officer at Kin Insurance, explains that the two are not interchangeable. She says, “A homeowners insurance policy pays for damages resulting from things like fire, theft, and windstorms, but it doesn’t cover repairs if a system like your HVAC breaks down or an appliance malfunctions.”
Having both options provides maximum protection for your house and the appliances within.
Why Should You Buy a Home Warranty?
If you’re debating whether investing in a home warranty makes sense, remember that you can’t predict when your home systems or appliances will fail. A home warranty protects your savings and prevents you from spending hours searching for a trusted local contractor.
Home warranties also provide broader protection than 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 one to two years. They also don’t cover systems and appliances that break down from normal wear and tear.
Conlin says that a home warranty could benefit a first-time buyer with no home maintenance experience. It also covers older homes and appliances as long as they’re in good working order when you buy the warranty.
We Recommend Purchasing a Home Warranty if:
- You’re a first-time homebuyer and want protection for all of your systems and appliances.
- You own an older home.
- You own expensive or older appliances and systems.
- You’re new to an area and don’t know any local repair technicians.
- You want to limit your out-of-pocket expenses for repairs or home systems and appliance replacement.
- You plan on selling your home and want to entice potential buyers.
When Is the Best Time To Buy a Home Warranty?
You can buy a home warranty at any time. If you recently bought a home, one may already be included with your purchase. Some sellers include home warranty plans to make their sales more enticing to buyers. Even if coverage doesn’t come with your new home, there are advantages to purchasing it yourself—some companies even offer discounts for buyers who purchase coverage within 30 days of closing.
Existing homeowners should add coverage when needed, especially before peak seasonal changes that potentially impact heating and cooling systems. Before adding coverage, though, you must consider the condition of your home system and appliances. Home warranties only cover systems and appliances that are working at the time of purchase. There’s also typically a 30-day waiting period before coverage begins, and you must show evidence of regular maintenance on your HVAC and other systems.
Founder and CEO of Ninebird Properties, Mark Buskuhl, says, “Homeowners can purchase a home warranty at any point during their homeownership, as long as their home and its systems and appliances meet the eligibility requirements of the warranty company.” Not only will routine maintenance help qualify you for coverage, but it also extends the life spans of home systems and appliances.
How To Buy a Home Warranty
When shopping for a home warranty, it pays to do some thinking and research in advance. You should do the following:
1. Determine Your Coverage Needs
Some providers organize their plans based on the number of items covered, while others divide coverage by systems and appliances. Take note of your items that need coverage and weigh your options before buying a plan. For example, if your appliances are relatively new, a home systems plan will likely be more useful.
2. Consider Your Budget
If you’re on a budget, there are plans below $50 per month that may fulfill your requirements. Our research identified many companies that let you adjust your monthly premium relative to your deductible, also known as a service call fee, to customize a plan for your budget. Additionally, some providers offer free months of service and discounts for choosing an annual premium. You should also consider the service call fee included with each plan, as you‘ll pay this every time you need service.
3. Research Home Warranty Companies
As you research potential home warranty companies, consider the following factors:
- Better Business Bureau (BBB) scores: Look for providers with at least a B rating from the BBB. Each company’s BBB page will include alerts of deceptive practices or government actions. You can also see ratings and comments from former customers.
- Customer reviews: Check third-party customer review sites such as Yelp and Google Reviews to get a sense of what working with that home warranty company is like.
- Customer service: Customer service is a crucial part of the home warranty experience. If an item or system breaks down, you’ll want a responsive and competent customer service team to help 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. We found a few providers that also have online chat services.
3. Review Sample Contracts
Read sample home warranty contracts from the providers you’re considering. This lets you see their limitations and available coverage. We discovered that most companies offer sample contracts on their websites. If you don’t see one, Google “[company name] sample contract.” Note that contracts from a single company may differ based on geographic region and plan options.
Check coverage limits for all covered items and systems. These caps typically cover repair costs but may not be enough for an entire replacement. The Federal Trade Commission also recommends researching the claims process, including how to make a claim and who will handle the repairs. Above all, make sure you understand what types of damage and parts of a system or appliance are covered and which are excluded.
4. Gather Quotes and Compare
We recommend obtaining at least three quotes from reputable home warranty providers before signing a contract. This lets you closely compare providers and their service contracts, limitations, and costs. Nearly all companies offer free quotes online and over the phone. While obtaining sample quotes, we found that most providers have easy-to-navigate online quote tools that include full plan details and pricing. Some sites also offer special discounts and online-only promotions.
What Does a Home Warranty Cover?
Home warranty coverage varies by the type of plan. Typically, a home warranty provider offers three plans: systems plans, appliance plans, and combo plans. These options cover a range of different home items:
- System plans cover essential home systems such as air conditioning, heating, ductwork, plumbing, water heater, garbage disposal, smoke detectors, ceiling fans, and doorbells.
- Appliance plans cover common home appliances such as a refrigerator, dishwasher, range, oven, stove, built-in microwave, washer and dryer, garage door opener, and freestanding ice maker.
- Combo plans cover both systems and appliances. These plans tend to be the most popular options, and home warranty companies often include extra perks with their combination plans.
Home warranty companies may also provide custom plans in which you mix and match items to your preferences and needs. Additionally, they may offer plans with different coverage caps or service fees.
Many providers also have add-on coverage for miscellaneous items. Some examples of add-on options include:
- Annual HVAC maintenance
- Carpet cleaning
- Pest control
- Roof leaks
- Second refrigerators
- Septic tank and pumping
- Swimming pools and spas
You can add these items to your plan for an extra per month cost. Of the more than 1,000 homeowners we surveyed in December 2023, 42.8% purchased a plan that included systems, appliances, and add-ons. Consider reading our list of top-rated septic warranty companies to learn more.
What Does a Home Warranty Not Cover?
Unfortunately, home warranties don’t cover all home repairs. Home warranty providers typically exclude the following situations and types of damage:
- Cosmetic issues
- Damage to accessories such as shelves, racks, and dials
- Damage caused by the improper installation, repair, or maintenance
- Internet-connected “smart” components of an appliance
- Misuse of an appliance or system by using it for purposes other than residential use
- Preexisting conditions at the time a home warranty begins
- Rust or corrosion
Quick Tip
- We recommend you identify the specific exclusions from a provider by asking a representative or finding the list of coverage limitations in a sample contract. In addition to excluded repair causes, a home warranty company typically sets 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.
Recommended Home Warranty Companies
Our top three choices for home warranty companies offer the best balance of comprehensiveness and affordability. We recommend getting a quote from each provider and comparing coverage and pricing.
- Liberty Home Guard: Liberty Home Guard has 38 add-on options, a 60-day workmanship guarantee, and solid coverage limits. The company offers appliance-only, systems-only, and combined plan options. Liberty Home Guard provides a service call fee that ranges from $65–$125 per claim. The company offers service in all 50 states.
- American Home Shield: With more than 45 years of experience, American Home Shield (AHS) is one of the home warranty industry’s most trusted providers. The company has generous coverage caps and offers comprehensive plans. It lets you choose between a $100 or $125 service fee. The company doesn’t serve Alaska or Hawaii.
- Select Home Warranty: Select Home Warranty provides some of the lowest premiums available, priced around $41–$47 per month. Its unique offerings include free limited coverage for roof leaks, seasonal promotions, and high coverage caps for HVAC systems. The provider is not available in Nevada, Washington, or Wyoming.
Our Conclusion
When buying home warranty coverage, you should consider your coverage needs and budget before committing to a provider. We recommend checking each company’s reputation, customer service process, and coverage options. You should also request quotes from at least three home warranty companies and compare them to find your best option.
FAQ About Buying a Home Warranty
What is a home warranty coverage cap?
A home warranty coverage cap is the dollar amount a provider is willing to pay to repair or replace a covered item. Some providers cap coverage collectively, which means every item breakdown is subject to a set coverage cap (e.g., $2,000 per year) for the policy period. Other providers cap coverage per home system or appliance.
Do home warranties guarantee their work?
Yes, reputable home warranty providers offer a workmanship guarantee for completed repairs. The industry standard is a 30-day guarantee. If a repaired item breaks down during the 30 days, your provider will send a service technician to fix it for free (with no additional service call fee).
Are home warranties worth the cost?
A home warranty could save you hundreds or even thousands of dollars in home repairs, depending on what items break down and which coverage you choose.
Do home warranties cover broken home items?
All home warranty providers require your home items to be in working condition before providing coverage. You can file a claim if a covered item breaks after your initial waiting period.
What is the difference between homeowners insurance and home warranty plans?
A home insurance plan covers items in your home damaged by theft, fire, or storms. A home warranty plan covers items in your home that fail due to normal wear and tear. Both policies can save you the cost of significant repairs because they provide complementary coverage.
Our Rating Methodology
We back 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, cost, trustworthiness, plan transparency, customer support, and flexibility to arrive at a final score on a 5-point rating scale.
To share feedback or ask a question about this article, send a note to our Reviews Team at reviews@thisoldhousereviews.com.
