Here’s a breakdown of how we reviewed and rated the best home warranty companies
If you don’t have ample savings to cover repairs, a home warranty could be worth it, especially if your home’s major systems and appliances are older and at risk of breaking down. In this article, we at the MarketWatch Guides team will discuss the key factors to consider when purchasing a plan from one of the best home warranty companies.
The listings that appear are from companies from which this website may receive compensation, which may impact how, where and in what order products appear. Not all companies, products or offers were reviewed in connection with this listing.
What Is a Home Warranty?
A home warranty is a service contract that allows homeowners to avoid expensive repair bills. A home warranty will cover the cost for a repair in lieu of paying out-of-pocket, given that the policyholder pays a monthly premium.
By owning a home warranty, millions of homeowners have peace of mind that their appliances or systems breaking down will not also break their bank accounts. Like health insurance companies, home warranty companies set their prices to an amount where it is probable that they will make more money off your payments in the long run than they will spend servicing your home. However, most homeowners who own a home warranty know this and still believe their home warranty is worth it.
How Does a Home Warranty Work?
Instead of paying for repairs or replacements out of pocket, home warranty companies charge you a monthly premium and a service call fee every time you need a repair. You would simply pay your service fee (roughly $75 to $125) to have a certified technician repair or replace your heating system.
Most home warranty companies will send a technician within 24 to 48 hours to repair or replace your system or appliance. Reputable home warranty companies operate their claims center 24/7 to get a repair person out to your house as quickly as possible. These companies also tend to provide emergency services if an appliance or system needs an emergency repair.
Compare Home Warranty Companies
The listings that appear are from companies from which this website may receive compensation, which may impact how, where and in what order products appear. Not all companies, products or offers were reviewed in connection with this listing.
| Company | Average Service Fee | Superlative | Monthly Cost | BBB Rating | |
|---|---|---|---|---|---|
|
$100
|
Best Value for Coverage
|
$64
|
B
|
||
|
$50 to $125
|
Best for Add-Ons
|
$63
|
NR
|
||
|
$100 or $125
|
Most Experienced
|
$78
|
B
|
||
|
$75 to $100
|
Best for Budget Shoppers
|
$45
|
B-
|
| Company | Average Service Fee | Superlative | Monthly Cost | BBB Rating | |
|---|---|---|---|---|---|
|
$100
|
Best Value for Coverage
|
$64
|
B
|
||
|
$50 to $125
|
Best for Add-Ons
|
$63
|
NR
|
||
|
$100 or $125
|
Most Experienced
|
$78
|
B
|
||
|
$75 to $100
|
Best for Budget Shoppers
|
$45
|
B-
|
What Does a Home Warranty Cover?
A home warranty typically covers major home systems and appliances. The exact coverage will depend on the specific home warranty provider and plan you choose but typically includes items such as:
- HVAC systems
- Plumbing and electrical systems
- Kitchen appliances (refrigerator, oven, dishwasher, etc.)
- Laundry appliances (washer and dryer)
- Water heaters
- Garbage disposals
- Ceiling fans
- Garage door openers
- Well systems
It’s important to note that home warranties do not cover pre-existing conditions or items that have been improperly maintained or installed. Additionally, some plans may limit coverage amounts and service fees, so it’s important to read the terms and conditions carefully before purchasing a home warranty.
What Does a Home Warranty Not Cover?
Generally, home warranty policies don’t cover all household items or causes of damage. Some of the most common exclusions you will find on home warranty contracts include:
- Damage from pre-existing conditions
- Cosmetic damage
- Damage caused by acts of nature
- Home modifications
- Neglect or lack of maintenance
- Commercial-grade appliances
- Non-operational units
- Outdoor components
- Cosmetic appliances
- Mismatched systems
- Secondary or detached structures
- Items under manufacturer warranty
- Items not included in your list of covered items
- Unusual wear and tear resulting from misuse
Some home warranty policies have additional exclusions. You can review your policy details to understand what is and is not covered under your plan.
Pros and Cons of Home Warranties
Gives you peace of mind that your systems and appliances will be covered when they inevitably break down
Provides financial stability when your systems or appliances break down
Allows access to a network of experienced, licensed service providers for all of your systems and appliances, saving you the time of finding professional contractors for each of your needed repairs
If you don’t use your coverage, you may pay more in the long run by having a home warranty than not having one
Many home warranty companies do not allow you to pick your favorite service technician if you have one
If your system or appliance is improperly maintained, your home warranty company may not cover it. Reasons for claim denials are detailed on a company’s sample home warranty contract
What Is the Cost of a Home Warranty?
The cost of a home warranty depends on various factors, including the provider you purchase your warranty from and the specific home warranty plan you purchase.
Home warranty companies charge you a monthly premium and a trade service fee, which you will only owe when you need a repair or replacement of your system or appliance.
A home warranty costs $54 per month on average, with an average service fee of $75 to $125 per visit. However, your home warranty cost will depend on your location, home size and other factors.
Home Warranty Annual Cost Calculator
The MarketWatch Guides team developed a calculator that analyzes the anticipated yearly expenses associated with owning a home warranty. To determine your projected annual home warranty cost, simply input your monthly premium, service call fee and estimated number of claims. We recommend getting quotes from our top providers directly, as prices vary by plan, location and home size.
The listings that appear are from companies from which this website may receive compensation, which may impact how, where and in what order products appear. Not all companies, products or offers were reviewed in connection with this listing.
Home Warranty Cost Calculator
Your Annual Cost Estimate
The results are estimates based on the information you provide and may not reflect the actual pricing of your quote.
To determine home warranty costs, MarketWatch Guides mystery shopped quotes for each plan type from 28 different home warranty providers. The results are estimates based on the information you provide and may not reflect the actual pricing of your quote.
What Do Common Home Repairs and Replacements Cost?
In order to determine whether or not a home warranty is worth it for you, it is important to know the cost of some of the most common home repairs and replacements. The table below shows the cost of repairing or replacing some of these common items, according to House Method.
Many appliances and systems you need in your home are not cheap. This is especially true when you have to replace them instead of repair them. Each of the five items in the table below costs at least $1,250 to replace, while the repair costs are at least $150. These are just a few of the many appliances and systems in your home that you might have to repair or replace, and it is not uncommon for multiple items to break down or need repairs in the same month.
Here are the associated costs of common home repairs and replacements:
| Item | Cost to Repair | Cost to Replace |
|---|---|---|
| Washing machine | $310 | $1,250 |
| Refrigerator | $310 | $1,250 |
| Oven/range/stove/cooktop | $150 | $1,675 |
| Heating system | $285 | $4,249 |
| Air conditioner | $347 | $5,413 |
Do I Need a Home Warranty?
Whether or not a homeowner needs to purchase a home warranty is a personal decision. Like choosing not to purchase health insurance, you are taking a gamble if you decide not to purchase a home warranty. You could potentially save money by not purchasing a home warranty, but it’s risky.
To our review team, purchasing a home warranty is advisable for homeowners who don’t have thousands of dollars in savings for expensive, unexpected home repairs. On the other hand, for those who have thousands of dollars in savings, the monthly cost of a home warranty may not be worth it.
What’s the Difference Between a Home Warranty and Homeowners Insurance?
If you already have a homeowner’s insurance policy, you may be wondering if you also need a home warranty. While home warranties and homeowners insurance may cover similar items, you use the policies in different circumstances.
Homeowners insurance is a type of financial protection that compensates you for sudden damage to the structure of your home or that causes a loss of your property. For example, if there is a fire in your kitchen, a homeowners insurance policy would help cover the cost of damage to both your home’s structure and the loss of appliances. Other common named perils, or situations that entitle you to a payout from your insurance provider, might include lightning strikes and burglaries.
Home warranties offer coverage only if your systems or appliances fail because of normal usage and wear and tear. It will not pay for a repair or replacement if a fire or natural disaster damages your kitchen or the home structure as homeowners insurance does. This difference in coverage is why lenders usually require people to secure homeowners insurance as part of a mortgage agreement but do not require a home warranty.
How To Choose a Home Warranty
With so many companies offering home warranty plans, how can you be sure you’re getting the best option for your home? Use the following steps to narrow down your choice of home warranty providers:
- Define which items you need coverage for: Walk through your home and create a list of all of the systems and appliances you want included in your home warranty coverage. Remember that the more items you include, the more expensive your monthly premium will be.
- Determine your coverage needs: Next, think about how much coverage you would need for each of your major systems and appliances. For example, how much would it cost to replace your fridge if it broke? Prior home repair bills can provide insight into how much coverage you might want to buy for your home’s major components.
- Compare home warranty providers: Using your list of essential home systems and appliances, start comparing sample policies between top-rated providers. You can view a quick comparison of our top recommended providers using our guide to the best home warranties. It can be helpful to narrow down your choice to three options before proceeding.
- Get quotes: Be sure to get a custom quote from each home warranty provider you’re considering, since coverage inclusions, limitations and terms might vary. Keep a copy of each quote in writing, and make sure to note how much the company charges as a service fee each time you use your coverage.
- Talk to a representative: Before buying coverage, consider connecting with a representative from each major home warranty provider to ask more questions. Calling with a few sample questions can give you insight into the level of service you would receive if you were a customer. You can also look at customer reviews on platforms like the Better Business Bureau and Trustpilot for more insights.
When To Pass on Home Warranty Coverage
While a home warranty can benefit certain homeowners, it may not be worth the cost for everyone. Take a look at your household finances. If you have an emergency fund, you may have enough to cover the cost of home repairs out-of-pocket, making a home warranty redundant.
You may also be able to pass on a home warranty if your appliances are still under warranty. If you recently invested in new appliances or bought a new home, existing warranties may cover these items. Because most home warranties explicitly exclude items covered by another warranty, property owners with a manufacturer’s warranty would not need home warranty coverage.
It’s important to read your contract thoroughly before signing and to choose coverage from a reputable provider to avoid misunderstandings relating to the warranty.
Home Warranty Alternatives
Buying a home warranty is not the only way to safeguard yourself against the cost of unexpected home system and appliance repairs. Consider the following alternatives if you believe a home warranty is not the right choice at this time.
Build an Emergency Fund
One alternative to a home warranty is building and maintaining a robust emergency fund. An emergency fund serves as a financial safety net, allowing you to cover unexpected repair costs without the need for a warranty.
Extended Manufacturer’s Warranty
When purchasing new appliances or home systems, explore products that come with extended manufacturer warranties. These warranties often provide coverage beyond the standard terms, offering protection against product defects and malfunctions. This extra coverage lets you skip the extra cost of a home warranty. Opting for products with extended warranties can be a strategic way to mitigate repair costs, especially for high-value items in your home.
Before purchasing a home warranty, review the contracts and service details of your current appliances to see if any remain covered under an original manufacturer’s warranty. As a note, home warranty contracts usually exclude coverage for items under another warranty.
Only Cover High-Risk Items
Instead of opting for a comprehensive home warranty plan, consider targeted service contracts for high-risk items in your home. For example, suppose your HVAC system left you with an expensive repair bill in the past. In that case, you might want to consider purchasing a systems-only plan that specifically covers HVAC repairs and replacements. This approach allows you to tailor coverage to the most critical areas of your home, saving on overall costs.
DIY Skills and Education
Learning how to handle minor home repairs can empower you as a homeowner and help you save hundreds on home maintenance and repairs. You could invest in a home repair course online or at your local community college, or research free resources online that guide beginners through the basics of home repair. While you should avoid taking on repairs to your major systems as an inexperienced home repair professional, learning to tackle basic maintenance tasks and common repairs can help you avoid buying a home warranty.
Frequently Asked Questions About If a Home Warranty Is Worth It For You
The biggest con of a home warranty is the limited range of coverage. Home warranties only cover damage from regular use, and policies usually exclude damage from pre-existing conditions and improper maintenance. Combined with coverage limits, you may pay for a policy you cannot use in many circumstances. Two other negatives include the service fees due each time you use your plan and the potential for denied claims.
A home warranty can save you money on repairs or replacements over time, especially if you live in an older home with systems and appliances more susceptible to breakdowns. Home warranties offer low-priced repairs for covered home systems and appliances, helping policyholders who use their coverage to save money. You can calculate what you spent on system and appliance repairs last year to determine if the benefits of a home warranty outweigh the costs.
Most home warranty providers use the phrase “service contract” to refer to the actual policy document that outlines your rights and coverage after purchasing a warranty. The service contract should outline what systems and appliances your home warranty provider covers. It should also include details about coverage limits, exclusions, warranty term length and service call fees. In many cases, you can review a company’s sample contract before enrolling in coverage.
