A home warranty, also known as a home protection plan, is an annual service contract that covers repairs and replacements to major home systems and appliances that break down due to normal wear and tear. Unlike homeowner’s insurance, which covers liability, property loss, and short-term housing costs, a home warranty covers the systems and appliances in your home.
Keep reading to learn about the benefits of a home warranty, what exactly one covers, how to purchase the right plan, and see our recommended home warranty providers.
What Does a Home Warranty Cover?
Home warranty plans cover your home’s major systems and appliances. There are primarily three types of home warranty coverage: systems plans, appliance plans, and combination plans.
- System plans will cover whole-home systems like your air conditioning, heating, ductwork, electrical, plumbing, water heater, garbage disposal, smoke detectors, ceiling fans, and doorbells.
- Appliance plans will cover major appliances like your refrigerator, dishwasher, range, oven, stove, built-in microwave, clothes washer and dryer, garage door opener, and freestanding ice makers.
- Combination plans cover both systems and appliances. Some home warranty companies will also allow you to customize your plan and pick and choose the items you want covered.
Most companies will also provide optional coverage for miscellaneous items like your pool, hot tub, spa, or second refrigerator. Customers can tack on these items to their plan for an additional cost every month.
How Much Does a Home Warranty Cost?
On average, a home warranty costs between $300–$600 annually. Basic plans that cover only systems or only appliances may fall on the low end of that spectrum, while more comprehensive plans that include systems, appliances, and add-ons will fall toward the higher end.
In addition to a monthly premium, customers will have to pay a service call fee every time a technician comes to your house to assess the covered item in question. Most service fees cost between $75–$125, but some companies offer service fees as low as $60.
Before buying a home warranty plan, ask the company if any current promotions or discounts are going on. Some companies, like Select Home Warranty, offer promotions where customers get two months free when signing up.
Benefits of a Home Warranty
If you’re wondering how you might benefit from a home warranty contract, here are a few perks that the best home warranty companies offer:
- Saves homeowners money on expensive repair and replacement costs.
- Provides an easy way for homeowners to tackle repairs promptly.
- The home warranty company will send a local expert, meaning you don’t have to call around to find a technician for repairs.
- Home warranties can be a valuable real estate incentive if you’re selling your home.
How Does a Home Warranty Work?
After purchasing a home warranty, coverage typically kicks in within 30 days after your first payment. If a covered item breaks down under warranty, you can file a claim or service request with your company and get the issue addressed.
If you’re in the process of purchasing a home, you may be able to roll your home warranty into your mortgage payments. Talk to your mortgage lender and confirm with your home warranty company if this is possible.
In general, here’s what the process looks like:
- A covered appliance or system breaks down due to normal wear and tear.
- You call your home warranty provider to file a claim or you can submit a claim online.
- Once the service request has been processed, the company will send a technician to address the broken item typically within 48 hours.
- At your home, the technician takes a look at the system or appliance and recommends a repair or replacement. At this time, you would pay the set service fee.
- If the repair is minor enough and the contractor has the necessary parts, they can make the repair right away. If a replacement is needed, they’ll have to schedule a follow-up appointment to complete the replacement.
- After the repair or replacement is complete, you can enjoy your newly functioning system or appliance.
How Are Home Warranties Regulated?
Unlike insurance companies that have to be licensed by The National Association of Insurance Commissioners and the Federal Insurance Office, home warranty companies aren’t regulated by any federal laws.
According to the Service Contract Industry Council (SCIC), a national trade association that works with lawmakers across the country to develop fair and uniform regulation to protect consumers, the home warranty industry is regulated in all 50 states under consumer protection laws, and these laws and regulations vary from state to state.
Additionally, some states may require licensing for a home warranty company, while others will just require a company to register in the state. Licensing requires a provider to meet certain criteria, pass competency exams, or get certified before doing business in a state.
Registration may include completing a form and paying a fee to be an authorized provider in a state, but it doesn’t necessarily require a company to get certified or meet certain standards before operating.
Because of the differences in state regulation—and lack of regulation in some states—some home warranty companies are scams and give trusted home warranty providers a bad name. For more information on how states regulate home warranty companies, review this guide on state licensing for home service contracts.
How to Buy a Home Warranty
Before purchasing a home warranty, there are a few factors you should consider to ensure you’re getting the best protection plan for your home.
- Pick the type of plan you want—Some companies will organize their plans based on the number of items covered under each plan while others will divide coverage by the type of item (systems vs. appliances, for example). 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 provider will place coverage caps on certain appliances or systems. This limited amount will typically cover repair costs, but if a replacement needs to be made, it might not cover the entire thing. For example, if there’s a $2,000 coverage cap on your electrical system, you would be responsible for paying any amount past that limit.
- Think about the price you’re willing to pay—If you’re on a budget, there are plans below $50 a month that will suit your preferences. Most companies will let you pay on a monthly basis as opposed to an annual fee to make plans slightly more affordable for those who can’t pay a big fee upfront.
- Consider customer service—In the event that an item breaks down in your home, 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 have an online portal or app where you can file claims.
- Learn about the company’s reputation—In a saturated warranty industry, it can be difficult to determine which company is legitimate. When searching for a provider, look for one that has at least an B rating from the Better Business Bureau (BBB) and read third-party customer reviews to get a good idea of what it’s like to work with the company.
Recommended Home Warranty Providers
If you’re ready to buy a home warranty, consider the following companies. We recommend getting a quote from both providers so you can compare your options and negotiate better deals, finding a price that’s right for you.
- American Home Shield: With more than 45 years of experience, American Home Shield (AHS) is one of the most trusted companies in the business. Known for providing generous coverage caps and offering comprehensive coverage plans, AHS also lets customers choose between a $75, $100, and $125 service fee. AHS may not be the right choice for you if you live in Alaska.
- First American Home Warranty: First American Home Warranty (FAHW) is different from other companies in that it offers a First Class Upgrade, which covers systems and items even if they were improperly installed, modified, or maintained. It also has a risk-free, 30-day money-back guarantee and provides 24/7 customer service. FAHW may not be a good choice for you if you want protection specifically for your air conditioning.
|Link||Star Rating||BBB Rating||Monthly Cost||Service Fee|
|American Home Shield||VISIT SITE||B||$40–$58||$75–$125|
|Liberty Home Guard||VISIT SITE||A-||$40–$60||$65–$125|
|Select Home Warranty||VISIT SITE||B||$36–$38||$60–$75|
|First American Home Warranty||VISIT SITE||B||$36–$38||$75|
|Cinch Home Services||VISIT SITE||B||$35–$62||$100–$150|
|AFC Home Club||VISIT SITE||B||$38–$54||$75–$125|
|First American Home Warranty|
Frequently Asked Questions
Our Rating Methodology
The This Old House Reviews Team is committed to providing comprehensive and unbiased reviews to our readers, and we aim to provide transparency in our review standards and research process.
Our research process includes speaking with representatives from more than 40 home warranty providers, requesting quotes, and asking clarifying questions to gain insight into each provider’s benefits and downsides. We also analyze sample contracts from each company to understand specific coverage terms.
To rate companies, we apply the data we have gathered to our review standards. These standards are on a 100-point scoring system, which is detailed below:
- Coverage (35 points): Providers are scored based on breadth and depth of coverage. We focused on key home systems (HVAC, plumbing, and electrical), essential appliances (refrigerator, ovens, and laundry machines), and unique coverage items (such as roof-leak coverage and code violation allowances). Coverage scores are weighted by taking into account coverage caps and other limiting factors, meaning providers with greater range of coverage and higher coverage caps score the highest.
- Value (30 points): A company’s plan value is a reflection of how well it serves the customer in comparison to what the customer pays for the policy. We accounted for monthly costs, service call fees, and cost flexibility (such as customizable service call fees, discounts, and multi-year policies).
- Trustworthiness and Transparency (21 points): Trustworthiness and transparency are a reflection of how well the provider considers the customer’s interests. We scored items such as the length of workmanship guarantees, online availability of a sample contract, policy change flexibility, and ease of cancellation. Additionally, we scored items that reflect industry reputation and customer satisfaction, including analyzing brand reputation across the Better Business Bureau and third-party customer review aggregators.
- Availability and Service (14 points): Quality of customer service is key to customer satisfaction. We dug into each provider’s guaranteed response times, claims processes, service flexibility, emergency availability, and more.
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