Your appliances are working today—but what about tomorrow? If your fridge breaks down, your water heater leaks, or your A/C quits in the middle of summer, you’re suddenly facing an expensive, unexpected bill. That’s the situation home warranties are meant to protect you from. But while the idea of extra coverage sounds smart, home warranties aren’t always straightforward—and they’re not always worth the cost.
If you’re a homeowner or buying a new home, you’ve probably been offered a home warranty or considered getting one “just in case.” This guide will break down what home warranties actually cover, what they don’t, and how to know if signing up is the right move for your situation—or a waste of money.
What Is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of certain systems and appliances in your home when they break down due to normal wear and tear. It’s not the same as homeowners insurance, which protects against events like fire, theft, or weather damage. Instead, a home warranty covers things like your dishwasher, oven, HVAC system, electrical panel, and plumbing fixtures—things that stop working just because they’re aging.
You typically pay a flat annual fee (often between $300 and $700) and a service fee (around $75 to $125) each time you file a claim and a technician is dispatched. In return, the warranty company agrees to repair or replace covered items if they break during your contract period.
Home warranties are offered by third-party companies like American Home Shield, Choice Home Warranty, and Select Home Warranty. Some home sellers offer a warranty as part of the sale to attract buyers, and many real estate agents encourage new buyers to get one to protect against surprise repair bills after closing.
What’s Typically Covered—and What’s Not
Coverage varies by provider and plan, but most home warranties offer three types of plans: appliance-only, systems-only, or combination coverage. You can often add optional coverage for extras like a second refrigerator, pool equipment, or septic systems.
A standard home warranty plan usually covers:
Major appliances like your oven, refrigerator, dishwasher, clothes washer, and dryer
Major systems like your heating and cooling system, electrical wiring, and plumbing
Some structural components, depending on the plan and provider
But there are exclusions—and plenty of them. Most warranties won’t cover damage from neglect, improper installation, or pre-existing conditions (even if you didn’t know about them). Cosmetic damage, routine maintenance, and items still under manufacturer warranty are also typically excluded.
Coverage may also be capped. For example, your plan may only pay up to $1,500 for an HVAC repair—even if it ends up costing twice that. And you’ll usually need to use the company’s approved technicians, meaning you don’t get to choose your own contractor.
This is why it’s important to read the fine print carefully before you sign. The real value of a home warranty depends on what’s included—and what isn’t.
Who Can Benefit from a Home Warranty?
Home warranties can make sense for homeowners who want financial predictability, especially those without an emergency fund or those who recently bought a home and aren’t sure how old the systems and appliances really are. If you’re not handy or don’t want to manage the hassle of coordinating repairs, having one number to call can be appealing.
They can also offer peace of mind for landlords managing rental properties or for people who bought a fixer-upper and expect things to go wrong. If a $500 yearly policy saves you from a $2,000 HVAC repair, it’s a clear win.
However, they’re less useful for homeowners with brand-new appliances still under warranty, or for those who are comfortable handling small repairs themselves. In many cases, putting the money you’d spend on a home warranty into a dedicated savings account might be just as effective—if not better.
Things to Watch Out For
One of the biggest complaints about home warranties is denied claims. Customers often assume everything is covered, only to find out that a specific failure isn’t included, or the warranty company blames the issue on a pre-existing condition.
Another issue is service delays. Because warranty companies work with approved networks of contractors, you may have to wait longer than you’d like for a technician—especially during peak seasons like summer or winter.
Also, beware of high-pressure sales tactics. Some warranty companies use aggressive marketing, cold calls, or misleading mailers to get homeowners to sign up. Always research a company’s reviews, read the contract thoroughly, and avoid offers that feel too good to be true.
If you’re considering a warranty, look for providers that are transparent about their pricing, coverage caps, and claims process. Independent review sites like ConsumerAffairs and Better Business Bureau can give you insight into customer experiences and complaint history.
Alternatives to Home Warranties
If you’re not sold on the idea of a warranty, you’re not out of options. You can self-insure by setting aside money each month into a home maintenance savings fund. Experts often recommend saving 1% of your home’s value annually to cover repairs and upkeep. For a $200,000 home, that’s $2,000 per year—or about the cost of one or two major appliance repairs.
Some utility companies and appliance manufacturers also offer service plans or extended warranties for specific systems. If you only want coverage for your HVAC or water heater, this type of plan might be more affordable and easier to manage.
Another alternative is a homeowners insurance endorsement, which may cover specific breakdowns not included in your main policy. You’ll need to check with your insurer to see what’s available.
How to Shop for a Plan (If You Decide to Buy)
If you’ve weighed the pros and cons and want to move forward with a home warranty, take time to compare multiple providers. Look closely at coverage details, exclusions, service fees, and annual caps. Ask for sample contracts and compare them side by side.
Customer service matters too. Look for companies with 24/7 support, solid reviews, and a straightforward claims process. Consider how quickly they respond and whether their technicians are local.
Before committing, ask yourself: What’s most likely to break in my home? How old are my systems and appliances? Am I comfortable managing repairs on my own? The more clearly you answer those questions, the more confidently you can choose a plan that fits.
Final Thoughts: Protection or Overkill?
Home warranty coverage offers real value for some homeowners—but it’s not a one-size-fits-all solution. If you have aging systems and little cash saved for emergencies, a warranty might offer peace of mind and financial relief. But if you prefer more control or already have newer equipment, a warranty might cost more than it saves.
The key is understanding exactly what you’re buying, what it covers, and how to use it wisely. A home warranty isn’t a magic shield—but with the right provider and expectations, it can be a useful tool in your homeowner toolkit.
Sources
American Home Shield
Choice Home Warranty
Select Home Warranty
ConsumerAffairs – Home Warranty Reviews
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