How Much Does a Home Warranty Cost?

What Should You Know About Home Warranty?

A home warranty is a service contract that covers the repair or replacement of important home systems and appliances that break down over time. Unlike home insurance, which covers damage from unexpected events like fires, floods, or theft, a home warranty specifically covers wear and tear issues.

What is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of important home systems and appliances that break down over time. Unlike home insurance, which covers damage from unexpected events like fires, floods, or theft, a home warranty specifically covers wear and tear issues.

How Does a Home Warranty Work?

When a covered item breaks down, you contact your home warranty provider. They will appoint a technician to see what’s wrong. If the problem is covered under your warranty, the provider will cover the cost of the repair or replacement, minus any service fee you need to pay. This fee is usually a small, fixed amount and is specified in your contract.
Let’s see how it works:

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  You buy a home warranty plan from a provider. This can be done at any time, not just when you buy a home. Most plans have a 30-day waiting period before coverage begins. This prevents people from buying a warranty only when something breaks.

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  When something in your home stops working properly, contact your home warranty company via phone or file a claim online. Many companies have 24/7 claim services.

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  The warranty company contacts a local service provider in their network. In their turn, the service provider contacts you to schedule an appointment.

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  The technician diagnoses the problem and fixes it if possible. If the item can't be repaired, the warranty company may replace it. This depends on your specific contract terms.

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  Some companies offer guarantees on the work done. They may follow up to ensure the problem is resolved.

How is a Home Warranty Different from Home Insurance?

While both protect homeowners, home warranties and home insurance serve different purposes:

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Pros and Cons of a Home Warranty

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What Is Typically Covered and Not Covered by a Home Warranty?

While home warranty plans can vary, most include similar coverage for home systems and appliances. Here’s a detailed look at what you can generally expect.

What Is Typically Covered

Home warranties usually cover major home systems and appliances. Here are the common categories:

Home Systems:

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  Major Appliances:

  This often includes refrigerators, ovens, dishwashers, cooktops, garbage disposals, and built-in ventilation fans.

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  Plumbing Systems:

  Coverage usually extends to repairs for toilets, sinks, faucets, bathtubs, showers, garbage disposal lines, and the main sewer line (up to a specific distance).

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  Electrical Systems:

  Electrical wiring, outlets, switches, and sometimes even ceiling fans can be covered for malfunctions.

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  HVAC Systems:

  This typically covers repairs for your central heating and air conditioning system, including furnaces, air conditioners, heat pumps, and ductwork.

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  Water Heaters:

  Standard tank and tankless water heaters.

Home Appliances:

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  Kitchen Appliances:

  Refrigerators, ovens, stovetops, dishwashers, built-in microwaves, and garbage disposals.

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  Laundry Appliances:

  Washers and dryers.

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  Other Appliances:

  Garage door openers and ceiling fans.

What Is Not Typically Covered

While home warranties cover many essential systems and appliances, they do not cover everything. Here are the items and issues generally not covered:

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  Cosmetic Issues:

  Don't expect a warranty to fix peeling paint on your fridge or a cracked knob on your stove.

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  Normal Maintenance:

  Routine maintenance like cleaning clogged drains or replacing air filters is your responsibility.

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  Structural Elements:

  Walls, roofs, and foundations are not covered. Damage to these elements falls under home insurance.

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  Pre-Existing Conditions:

  Issues that existed before the start of the warranty are generally excluded. This includes any known problems or malfunctions.

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  Non-Mechanical Parts:

  Items like doors, windows, and cosmetic parts of appliances (handles, knobs).

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  Improper Maintenance or Installation:

  If a breakdown is due to poor maintenance, incorrect installation, or unauthorized repairs, it is not covered.

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  Normal Wear Items:

  Items like light bulbs, fuses, filters, and batteries are not covered as they are considered normal wear and tear items.

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  Certain Appliances or Systems:

  Some warranties exclude specific items, like standalone freezers or secondary refrigerators. Specialty systems (e.g., central vacuum systems) may require additional coverage.

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  Pest Damage:

  Damage caused by termites, rodents, or other pests.

Factors That Affect Home Warranty Pricing

The cost of a home warranty can vary widely based on several factors. Let’s look at them closer.

Provider and Selected Plan

Different home warranty companies offer various pricing structures. Basic plans cover essential systems and appliances, while more comprehensive plans include additional items. Comparing providers can help you find the best price for the coverage you need.

• Budget-friendly$600 - $900 per year
• Mid-range$900 - $1,500 per year
• Premium service$1,500 - $8,100 per year

Add-On Coverage

If you opt for add-on coverage for items like pools, spas, septic systems, or second refrigerators, the cost will increase. Each add-on comes with an additional fee and costs $40 – $180 per year. Common add-ons include pool/spa, septic system, well pump, or roof leak coverage.

Payment Frequency

• Monthly paymentsMay increase total cost by 5-10%
• Annual paymentOften comes with a discount

Service Call Fee

You pay this fee every time you call for a technician. A lower service call fee usually means a higher annual premium, while a higher service call fee can lower your annual cost.

• Lower service fee ($60-$75)Increases annual premium
• Standard service fee ($75-$100)Normal pricing
• Higher service fee ($100-$125)May lower annual premium

Home Size

Larger homes may require more extensive coverage, thus increasing the price.

• Under 1,000 sq ftMay qualify for discounts
• 1,000 - 2,500 sq ftStandard pricing
• 2,500 - 5,000 sq ftMay increase cost by 10-30%
• Over 5,000 sq ftMay require custom pricing

Location

The average cost of a home warranty varies depending on where you live. Some regions have higher labor and parts costs, which can raise the price of coverage.

• Rural areasMight increase cost due to service availability
• Urban areasGenerally standard pricing
• States with high cost of living (e.g., California, New York)May increase cost by 10-20%

Home Age

Older homes with aging systems and appliances may cost more to cover due to the higher likelihood of breakdowns.

• New to 10 years oldMay qualify for discounts
• 10-20 years oldStandard pricing
• 20+ years oldMay increase cost by 10-25%

Customization Options

• Ability to remove items you don't needCan lower cost by 5-15%
• Increasing coverage limitsMay increase cost by 10-30%

Promotions and Discounts

Many home warranty companies offer promotions or discounts for first-time customers, multi-year plans, or bundling with other services.

• New customer discountsCan save 10-20%
• Multi-year contractsMay offer 5-15% savings
• Bundle discounts (e.g., with home insurance)Can save 5-10%

Things to Consider Before Getting a Warranty for Your Home

Before you jump on the first home warranty plan you find, here are some key points to consider:

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  Do your research

  Not all home warranty companies are created equal. Read reviews, compare plans, and get quotes from multiple providers to find the best coverage and value for your needs.

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  Understand the fine print

  Carefully read the warranty contract to understand exactly what's covered, what exclusions exist, and the process for making a claim.

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  Consider your budget

  Factor in the annual premium, deductible costs, and any potential service call fees to see if a warranty fits your budget.

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  Evaluate your risk tolerance

  If you're comfortable handling minor repairs yourself or have an emergency fund for unexpected breakdowns, a warranty might not be necessary.

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  Think about your home's age and condition

  Older homes with aging appliances and systems are more likely to need repairs, making a warranty more appealing.

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  Review your existing homeowner's insurance

  Remember, a typical home warranty covers breakdowns due to wear and tear, while homeowner's insurance protects your home itself from covered events.

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  Do you have any home maintenance skills?

  If you're handy and comfortable fixing minor issues yourself, you might save money by skipping the warranty.

Tips to Choose a Home Warranty Company for Your Needs

When looking for a home warranty, it’s important to choose wisely. Here are some tips to help you:

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  Research Different Companies:

  Start by researching various home warranty companies. Look at their plans, coverage options, and pricing. Reading customer reviews will help understand the company’s reputation and reliability.

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  Compare Coverage Options:

  Ensure the company offers coverage for the systems and appliances that are important to you. If you have special items like a pool or spa, check if they can be added to your coverage.

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  Understand the Costs:

  Examine both the annual premium and the service call fees. Some companies might have lower premiums but higher service fees, while others may offer higher premiums but lower service fees. Choose a plan that aligns with your budget.

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  Review Contract Terms:

  Understand the length of the contract and the renewal terms. Be aware of any automatic renewals and potential premium increases. Clear terms help you avoid unexpected costs.

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  Inquire About Response Times:

  How quickly will a technician be dispatched to your home when you need a repair?

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How to Reduce a Home Protection Plan Cost

Even if you’ve decided a home warranty is a good fit, there are still ways to save money when choosing a plan:

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  Choose the Right Coverage Level:

  Select a plan that covers only what you need. Avoid paying for coverage on systems or appliances you don’t have or that are already covered by another policy.

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  Bundle Services:

  Some companies offer discounts if you bundle your home warranty with other services, like home insurance. Check if bundling can save you money.

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  Look for Discounts and Promotions:

  Many home warranty companies offer discounts for new customers, referrals, or signing up for multi-year plans. Take advantage of these promotions to reduce costs.

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  Increase Your Service Call Fee:

  Choosing a higher service call fee can lower your annual premium. If you don’t expect to use the warranty often, this can be a cost-effective option.

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  Pay Annually:

  Paying for your plan annually rather than monthly can sometimes save you money. Some companies offer a discount for upfront annual payments.

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  Review and Adjust Coverage Periodically:

  Review your coverage every year to ensure it still meets your needs. Adjust or remove coverage for items that no longer need protection, which can save you money.

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  Regular Maintenance:

  Properly maintain your appliances and systems to prevent unnecessary breakdowns. Regular cleaning, lubrication, and inspections can extend their lifespan and reduce the need for repairs.

Conclusion

A home warranty can be a great solution to manage the repair cost in your home. While a warranty can provide peace of mind and potentially save money on repairs, it’s crucial to think about your needs and budget.
Always compare several options, analyze your potential maintenance costs, and strive to get the best plan for your needs. At the same time, regular maintenance and careful budgeting can also play a big role in keeping your home running smoothly and avoiding unexpected expenses.

Frequently Asked Questions