Best Home Warranty Companies

AFC Home Club offers flexible plans at affordable costs

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A home warranty is a contract that helps homeowners cover the cost of repairing or replacing appliances and systems that break down or fail. Using home warranties, homeowners can get discounted repair and replacement services (up to certain limits) for covered items that fail during the coverage period.

The best home warranty companies are those that offer a diverse set of coverage options, have high coverage limits and make it easy for homeowners to file claims. These companies also offer plenty of details about their offerings right on their websites, make it easy to purchase coverage, and are flexible when it comes time to choose a contractor.

Best Home Warranty Companies of 2021

Best Home Warranty Companies
Best Home Warranty Companies

Best Overall : AFC Home Club

Investopedia's Rating
4.7
AFC Home Club

AFC Home Club

  • Service Fees: $75/$100/$125
  • Annual Cost: $350 to $600
  • No. of States: 48
Why We Chose It

We chose AFC Home Club as our best overall because it's one of the most flexible home warranty companies for getting fast, reliable service. For example, while several competitors allow you to choose your own technician, AFC Home Club doesn't require prior approval—the company will connect directly with the repair person you select.

Pros & Cons
Pros
  • Low cost and low service fees

  • Pick your own technician

  • Good selection of plans and add-ons

Cons
  • Turnaround time on claims is two to four days

  • Must enter personal details to view pricing

Plans & Pricing

With AFC Home Club, you can choose from four plans and a list of additional coverage options. If you need service, you can call customer service 24/7/365 or file a claim online. In general, the company will dispatch a technician within 24 to 48 hours.

AFC Home Club offers four plans (prices depend on the plan and service fee you choose):

  • System Plan: air conditioning, heating system, water heater, electric system, plumbing system, and ductwork
  • Silver Plan: washer/dryer, refrigerator, range/oven/cooktop, dishwasher, garbage disposal, and garage door opener
  • Gold Plan: everything covered by the System and Silver Plans
  • Platinum Plan: everything covered by the Gold Plan plus ice maker and built-in microwave
Coverage

If you have an AFC Home Club policy, you're entitled to several extra "member benefits," including:

  • Moneytips: Free credit monitoring and identity protection alerts
  • DealCash: Savings at thousands of participating restaurants and retailers
  • Emergency Alert Network: Alerts to notify friends and family in an emergency

You can also add coverage for the following:

  • Sump pump
  • Septic system
  • Pool and spa
  • Hot water dispenser
  • Stand-alone freezer
  • Tankless water heater
  • Central vacuum
  • Well pump

Best Pricing : American Residential Warranty

Investopedia's Rating
4.7
American Residential Warranty

 American Residential Warranty

  • Service Fees: $55
  • Annual Cost: $300 to $720
  • No. of States: 50
Why We Chose It

American Residential Warranty is our top pick for pricing because the company is very transparent about its rates, has plans starting at low price points, and charges low service fees ($55). Plans are also customizable, coverage is available nationwide, and the company has an A+ rating with the Better Business Bureau.

Pros & Cons
Pros
  • A+ BBB rating

  • Low costs

  • Pick your own technician

Cons
  • Low annual limits on some appliances and systems

  • Not BBB accredited

Plans & Pricing

American Residential Warranty offers four basic plans:

  • Kitchen Plus ($34.99 per month): built-in microwave, dishwasher, garbage disposal, interior electric system, kitchen exhaust fan, range/oven/cooktop, refrigerator (excluding ice maker), and water heater
  • Heating & Cooling ($39.99 per month): central air conditioning, central home heating, humidifier, and interior electrical system
  • Platinum ($49.99 per month): everything the Kitchen Plus and Heating & Cooling plans cover
  • Platinum Premier ($59.99 per month): everything the Platinum plan covers plus ceiling fans, ductwork, garage door opener, plumbing stoppages (fixtures not included), plumbing system (fixtures not included), range hood, and refrigerator ice maker
Coverage

You'll get immediate service for emergencies; other requests for service are taken care of within 24-48 hours. You can speak with a live, U.S.-based customer service representative 24/7/365. What's more, you can choose your own service provider or use the company's network of licensed, pre-screened technicians.

You can further customize your plan with bundles or by including coverage for any of the following add-ons:

  • Enhanced air conditioning coverage
  • Extended coverage on multiple appliances and systems ("Deluxe Advantage")
  • Well pump
  • Pool and spa
  • Additional range/oven/cooktop
  • Additional refrigerator or freezer
  • Additional air conditioner
  • Plumbing system (included with Platinum Premier)
  • Ceiling Fans (included with Platinum Premier)
  • Enhanced plumbing coverage that includes faucets and fixtures ("Plumbing Advantage")
  • Food loss
  • External water or sewer lines
  • Water heater (included with Platinum Premier, Platinum, and Kitchen Plus)
  • Clothes washer and dryer (included with Platinum Premier)
  • Ice maker (included with Platinum Premier)
  • Built-in microwave (included with Platinum Premier, Platinum, and Kitchen Plus)

Best for Guaranteed Service : Cinch Home Services

Investopedia's Rating
4.2
Cinch Home Services

 Cinch Home Services

  • Service Fees: $100/$125/$150
  • Annual Cost: $385 to $1,000+
  • No. of States: 50
Why We Chose It

No matter which Cinch Home Services plan you choose, you won't be denied coverage for unknown preexisting conditions, rust, or corrosion. In addition, there's a 180-day "workmanship guarantee." If the problem persists, Cinch will fix it at no additional cost to you. If you need to make a claim, you can open a service request online, ask Alexa, or call customer service 24/7/365.

Pros & Cons
Pros
  • Protection for unknown preexisting conditions

  • Rust and corrosion coverage

  • 180-day workmanship guarantee

Cons
  • No coverage in Alaska and Hawaii

  • No option to pick your own technician

Plans & Pricing

Many home warranty companies have one or two service fees to choose from, but Cinch Home Services offers three. This can make it easier to find a plan that meets your budget—pay more each month for a plan with a lower service fee, or vice versa.

The amount you pay each month depends on the plan and service fee you choose and where you live. The Cinch website has an easy-to-use online quote: Enter your zip code and choose a deductible to see prices for the various plans (you don't have to enter any personal details).

Cinch offers three plans (price varies by region and plan):

  • Appliances: washer/dryer, range/oven/cooktop, dishwasher, built-in food center, freestanding ice maker, built-in microwave, range exhaust hood, refrigerator, built-in trash compactor, and wall oven
  • Built-in Systems: air conditioning (including ductwork), attic fans, ceiling fans, central vacuum, doorbells, electrical system, garage door opener, garbage disposal, heating system (including ductwork), instant hot/cold water dispenser, plumbing system, smoke detectors, sump pump, toilets, water heater, built-in whirlpool/jetted tub
  • Complete Home: everything covered by the Appliances and Built-in Systems plans
Coverage

You can also add coverage for the following:

  • Swimming pool and spa
  • Septic system
  • Well pump

Best for Coverage Options : American Home Shield

Investopedia's Rating
4.1
American Home Shield

 American Home Shield

  • Service Fees: $75/$100/$125
  • Annual Cost: $480 to $1,000+
  • No. of States: 49
Why We Chose It

American Home Shield has been in business for nearly 50 years. It's the largest, most-chosen home warranty provider, and it pays out more service requests than any other home warranty company.

Pros & Cons
Pros
  • Build your own plan

  • Low-cost options

  • Coverage add-ons

Cons
  • Low annual limits on some applications and systems

  • Need prior authorization to use your own technician

Plans & Pricing

The company offers several plans. However, something that sets American Home Shield apart is its "Build Your Own Plan" coverage. This option covers only the appliances and systems you choose. Think of it as an à la carte home warranty plan. When a covered appliance or system breaks down, you can request service online or by calling customer service.

American Home Shield offers four plans (price varies by region and plan):

  • Appliances Plan: refrigerator, range/oven/cooktop, washer/dryer, dishwasher, built-in microwave, trash compactor, freestanding ice maker, garage door opener, and built-in food center
  • Systems Plan: air conditioning (including ductwork), heating (including ductwork), electrical, doorbells, smoke detectors, ceiling fans, plumbing (including stoppages), water heater, garbage disposal, instant hot/cold water dispenser, and central vacuum
  • Combo Plan: everything covered by the Appliances and Systems plans
  • Build Your Own Plan: covers only the appliances and systems you choose 
Coverage

You can also add coverage for:

  • Electronics (extended warranty; no receipts required)
  • Pools and spas
  • Well pump
  • Septic system (first-year customers only; not renewable)
  • Guesthouse (under 750 square feet)

Best Ratings and Reputation : Amazon Home Warranty

Investopedia's Rating
4.1
Amazon Home Warranty

 Amazon Home Warranty

  • Service Fees: $75
  • Annual Cost: $349 to $549
  • No. of States: 50
Why We Chose It

Amazon Home Warranty (not affiliated with amazon.com) has only been around for 10 years, but it has already earned a solid reputation. The company boasts an impressive 4.14 out of five-star rating from over 1,181 customer reviews with the Better Business Bureau though it lost its accreditation for not adhering to the BBB's guidelines.

Pros & Cons
Pros
  • Appliance plan covers more than just appliances

  • Great selection of coverage add-ons

Cons
  • Only one service fee option

  • Must enter personal details to view pricing

  • Not accredited by BBB

Plans & Pricing

Amazon Home Warranty offers three plans and more add-on coverage options than most other home warranty companies. This can be a plus if you have a higher-end home with multiple systems or custom features.

Amazon Home Warranty offers three plans (price varies by region and plan):

  • Appliance Plan: dishwasher, refrigerator (including ice maker), washer/dryer, trash compactor, oven/range/stove/cooktop, microwave oven, instant hot water dispenser, garbage disposal, attic fan, ceiling fan, bathroom exhaust fan, doorbell, and kitchen fan/exhaust hood
  • System Plan: central A/C system, central heating system, plumbing (including stoppages), electrical system, hot water heater, ductwork, jetted bathtub, and garage door openers
  • Combo Plan: everything included in the Appliance and System plans
Coverage

You can also add coverage for the following:

  • Pool and spa
  • Additional central A/C
  • Additional central heating
  • Additional refrigerator
  • Additional hot water heater
  • Stand-alone freezer
  • Lawn sprinkler system
  • Septic system
  • Whole-house humidifier
  • Sump pump
  • Central vacuum
  • Well pump
  • Wine refrigerator
  • Septic tank pump
  • Water softener

Best for Reliability : First American Home

Investopedia's Rating
4.7
First American Home Warranty

First American Home Warranty

  • Service Fees: $75 - $125
  • Annual Cost: $384 to $510
  • No. of States: 36, plus the District of Columbia
Why We Chose It

First American Home Warranty has served over 8.6 million homeowners since getting its start in 1984. It wins our spot as the most reliable home warranty because, with over three decades in the industry and 24/7/365 service requests, customers can feel confident that First American will be there when needed.

Pros & Cons
Pros
  • Service claims 24/7

  • Provides coverage for duplicate appliances

  • Unlimited service requests

Cons
  • No coverage for roof leaks

Plans & Pricing

With First American Home Warranty, you can choose from two plans as well as purchase several optional add-ons for each plan. All plans have a service call fee which varies by plan and state and is payable online or to the technician during the initiation of the claim. There is a 30-day wait period before starting coverage

  • Basic plan: covers all essential appliances including garbage disposal, dishwasher, oven range, cooktop, microwave, trash compactor, refrigerator, and washer-dryer 
  • Premier plan: covers everything in the basic plan plus major home systems including plumbing, plumbing stoppages, water heater, heating, ductwork, electrical, garage door opener, and central vacuum system
Coverage

Optional coverages include: 

  • Central air conditioning (electric)
  • Additional refrigeration
  • Pool/spa equipment
  • Well pump
  • First-class upgrade
  • Septic tank pumping/system
  • HVAC tune-up

Best Regional Coverage : Landmark Home Warranty

Investopedia's Rating
4.5
Landmark Home Warranty

Landmark Home Warranty

  • Service Fees: $60 – $195
  • Annual Cost: $410– $660
  • No. of States: 6
Why We Chose It

Landmark Home Warranty wins top spot for best regional coverage because it specializes in servicing six states including Arizona, Idaho, Nevado, Oregon, Texas, and Utah.

Pros & Cons
Pros
  • Transparent pricing

  • Optional coverage for guest home

  • Flexible payment plans

  • Easy to use homeowner dashboard

Cons
  • No appliance only plan

  • Coverage is only available in six states

Plans & Pricing
  • Service Fees: $60 to $100, termite coverage is $195
  • Annual Cost: $410.04 to $660
  • Coverage Area: Arizona, Idaho, Nevada, Oregon, Texas, and Utah 

Landmark was founded in 2005 and is headquartered in Phoenix, Arizona. It offers its regional customers access to two different plans as well as plan add-ons. Plan prices vary between states and are based on a single-family home under 5,000 square feet. To be eligible for a plan you must have lived in your home for over 30 days.

Landmark Home Warranty offers two plans:

  • Total Protection Plan: covers air conditioning and heating as well as appliances including built-in microwave, central vacuum, dishwasher, garbage disposal, kitchen refrigerator, oven/range/cooktop, washer/dryer. It covers the electrical system and garage door opener and includes no-fault coverage, and plumbing system. Services that are covered include air conditioning tune-up, heating tune-up, pest control, re-key service, and subterranean termite treatment.
  • Home Systems Plan: covers air conditioning and heating, electrical system, no-fault coverage, plumbing system, air conditioning tune-up, heating tune-up, pest control, re-key service, and subterranean termite treatment
Coverage

Add-ons can be purchased to cover multiple appliances in a home (e.g. if you have multiple refrigerators or ovens), or to customize your plan coverage. Home warranty plan add-ons include:  

  • Booster and well pump
  • Built-in microwave
  • Dishwasher 
  • Exterior pipe leak repair
  • Freestanding ice maker
  • Freezer (stand-alone)
  • Garage door opener
  • Garbage disposal 
  • Grinder pump
  • Guesthouse
  • Kitchen refrigerator
  • Oven/range/cooktop
  • Pool and hot tub (chlorine)
  • Pool and hot tub (saltwater)
  • Roof leak repair
  • Septic system
  • Washer/dryer
  • Water softener
  • Well pump
  • Wet bar refrigerator

Best for Convenience : OneGuard Home Warranty

Investopedia's Rating
4.5
OneGuard Home Warranty

OneGuard Home Warranty

  • Service Fees: $69
  • Annual Cost: $360 to $672
  • No. of States: 3
Why We Chose It

OneGuard is our winner for best home warranty for customer experience because it offers both home warranty services and home maintenance services, all in one place. This equates to more convenience and more time back in the homeowner’s day. 

Pros & Cons
Pros
  • Strong customer experience

  • Combines home warranty and home maintenance services

Cons
  • Only provides coverage to three states

  • Must use OneGuard technician

Plans & Pricing

OneGuard Home Warranties was founded in 1990 and currently serves customers in Arizona, Texas, and Nevada. If you live in one of these three states, you can reach out to OneGuard for an instant online quote. If you have OneGuard coverage and encounter an issue, contact OneGuard’s customer service team which is available 24/7. There is a $69 service call fee and plan pricing varies between states.

OneGuard Home Warranty offers three different plans each with optional coverage options:

  • ApplianceGuard: covers appliances including kitchen refrigerator with ice maker and dispenser, dishwasher, range/oven/cooktop, built-in microwave, garbage disposal, instant hot water dispenser, trash compactor and washer and dryer. Also covers services including re-key and garage remote reprogram, carpet cleaning, window cleaning, dryer vent cleaning, pest control treatment, termite treatment, weed kill treatment, pool maintenance, and yard maintenance. Optional coverage: includes undetectable pre-existing condition coverage, built-in pool/spa (one set of equipment), salt water pool/spa (one set of equipment), additional pool pump/water feature (per unit), upgrade to built-in kitchen refrigerator, additional built-in kitchen refrigeration unit, additional freestanding kitchen refrigerator, additional freestanding refrigeration units (per unit), additional built-in microwave, additional dishwasher, additional range/oven/cooktop, and second washer and dryer
  • SystemGuard: covers systems including air conditioning, heating, plumbing, plumbing stoppages, water heater, electrical, ceiling and exhaust fan, central vacuum, smoke detectors, doorbells, garage door opener, permits and code upgrades, and equipment disposal. Also covers all services included in the ApplianceGuard plan plus A/C and heating system tune-ups and garage door tune-ups. Optional coverage: includes undetectable pre-existing conditions coverage, built-in pool/spa, salt water pool/spa, and additional pool pump/water feature
  • Home Guard: covers all appliances, systems, services, and optional coverage included in the ApplianceGuard and SystemGuard plans plus it also covers a guest house
Coverage

Each of OneGuard Home Warranty's plans offers its own optional coverage add-ons.

Best for Transparency : Sears Home Warranty

Investopedia's Rating
4.4
Sears Home Services

 Sears Home Services

  • Service Fees: $69
  • Annual Cost: $600 to $840
  • No. of States: 49
Why We Chose It

Sears Holdings has been in business since 1887 and didn’t introduce home warranties until 1999. While Sears Holdings filed for Chapter 11 bankruptcy in 2018, it is still offering home warranties.

We chose Sears as our best home warranty for transparency because it clearly outlines all of the coverage details on its website. No need to search for the cost of a service charge or the cap per claim, all of the details are listed in an easy-to-read table along with links to sample contracts. 

Pros & Cons
Pros
  • Transparency of plans terms and conditions

  • Up to 25% discounts offered on non-covered items (based on policy)

  • Free heating and cooling check once per year

Cons
  • Sears Holding Corporation is operating under Chapter 11 bankruptcy

  • Annual costs more expensive compared to others in the industry

Plans & Pricing
  • Service Fees: $60
  • Annual Cost: $599.88 to $839.88
  • Coverage Area: Nationwide coverage (except Alaska and Puerto Rico)

Sears Home Warranty program covers appliances and systems regardless of age, brand, or where they were purchased. The deductible per service ranges from $75 for the Appliance Plan to $100 for the System or Whole Home Plans. Claims are capped at $10,000 with an annual cap of $50,000. Expect a 30-day hold on all claims as well as a service guarantee of 180 days. 

Sears Home Warranty has three plans:

  • Appliance Plan: covers refrigerator and icemaker, built-in dishwasher, washer, dryer, range, cooktop, oven, built-in microwave, range exhaust fan, built-in trash compactor, and unknown pre-existing conditions
  • System Plan: covers central air conditioner, central heating, plumbing system, water heater, water softener, faucets and toilets, garbage disposal, plumbing stoppages, electric system, ceiling fans, garage door opener, and unknown pre-existing conditions
  • Whole Home Plan: covers everything included in the Appliance Plan and System Plan 

There are also extra benefits included in each of the three plans. 

  • One heating and one cooling preventive maintenance check per year included with any of the three plans
  • 25% discounts on appliance repairs for the System Plan 
  • 25% discounts on HVAC and water heater repairs available for the Appliance Plan
  • Discounts on appliances, HVAC, and water heater repairs during the 30-day waiting period for any of the plans 
Coverage

You can also purchase add-on coverage for your plan which includes: 

  • Pool and/or spa with heater (heater limit $1,000)
  • Septic tank with pumping (pumping limit $500. Thank replacement limit $1,000)
  • Stand-alone freezer
  • Sump pump
  • Well pump

Best for Comprehensive Coverage : The Home Service Club

Investopedia's Rating
4.1
The Home Service Club

The Home Service Club

  • Service Fees: $65 – $125
  • Annual Cost: $600 to $800
  • No. of States: 49
Why We Chose It

The Home Service Club was founded in 2009 and is based in New York. It is our winner for best comprehensive coverage because of its extensive plans which include many items that are normally considered add-ons. The Home Service Club has also won many home warranty service awards for “best in service” and “editors choice.” 

Pros & Cons
Pros
  • Transparency

  • Comprehensive home warranty plans

  • Nationwide coverage (excludes California)

  • No home inspection required

Cons
  • Expensive compared to other home warranty programs

  • High service fee

Plans & Pricing
  • Service Fees: $65 to $125
  • Annual Cost: $599.95 to 799.95 (varies by state)
  • Coverage Area: 49 states excluding California 

With The Home Service Club, you can cover your systems and appliances regardless of age, make, or model and repairs are guaranteed for 90-days. The Home Service Club offers two robust plans that can be further extended with additional coverage options. Standard coverage included 18 major systems and appliances and the comprehensive coverage included a total of 33 systems and appliances. 

The two different plans cover the following items: 

  • Standard Coverage: systems coverage for air conditioning, heating, plumbing, water leaks, water heaters, electrical systems, ceiling fans, central vacuums, garbage disposal and garage door opener. Appliance coverage includes built-in microwave oven, dishwashers, refrigerators, ovens/ranges/cook-tops, trash compactor, food centers (built-in), clothes washer, clothes dryer, and freestanding ice makers
  • Comprehensive Coverage: systems coverage for everything in the standard coverage plan plus ductwork, gas leaks, sump pump, whole house exhaust and attic fans, instant hot/cold water dispenser, pest control, telephone wiring, alarm warning, smoke detectors, doorbells, whirlpool motor and pump assemblies, plumbing stoppage coverage, plus all appliance coverage included in standard coverage option
Coverage

You can also purchase add-on coverage including: 

  • Sprinkler system line coverage
  • Freestanding freezer
  • Refrigerator built-in units with dual compressors
  • Well pump
  • Water softener
  • Jetted bathtub
  • Roof coverage
  • Pool and spa equipment
  • Spa and spa heater
  • Sewage ejector pump
  • Utility and home service line coverage

Final Verdict 

When choosing a home warranty program, it’s important to consider the type of coverage you need and the transparency of the home warranty company, as well as the cost. Before selecting a home warranty program, comparison shop between companies as coverage and rates will vary. 

AFC is our choice for the best home warranty company because of its transparency, variety of plans and add-ons, and it’s moderate prices. We also like that AFC lets you choose your own service technician. This is a great feature if you have a trustworthy technician that you prefer to work with as not all home warranty programs allow this.

Compare the Best Home Warranty Companies

Company Annual Cost Service Fee BBB Rating Coverage Year Founded
AFC Home Club
Best Overall
$350– $600 $75– $125 B Nationwide (except California, Hawaii, Nevada, and South Carolina)  1999
American Residential Warranty
Best Pricing
$300– $720 $55 A+ Nationwide 1946
Cinch Home Services
Best for Guaranteed Service
$385– $1,000+ $100– $150 A- Nationwide (except Alaska and Hawaii) 1979
American Home Shield
Best for Coverage Options
$480– $1,000+ $75– $125 B Nationwide (except Alaska and parts of New York) 1971
Amazon Home Warranty
Best for Ratings and Reputation
$349– $549 $75 B+  Nationwide 2009
First American Home
Best for Reliability
$384– $510 $75– $100 B Available in 36 states and the District of Columbia 1984
Landmark
Best Regional
$410– $660 $60– $100, termite coverage is $195 NR Arizona, Idaho, Nevada, Oregon, Texas, and Utah 2004
OneGuard
Best for Convenience
$360– $672 $69 A+ Arizona, Nevada, and Texas 1990
Sears
Best for Transparency
$600– $840 $60 NR Nationwide coverage (except Alaska and Puerto Rico) 1999
The Home Service Club 
Best for Comprehensive Coverage
$600– $800 $65– $125 49 states excluding California 2009

Frequently Asked Questions

What Is a Home Warranty?

Most people are very familiar with homeowners' insurance, which protects against any accidental damage to your home and belongings due to theft, fire, storms, and natural disasters. A home warranty protects your home, too, but it works differently.

A home warranty is a service contract that helps pay for repairs and replacements for covered appliances and major home systems. For a monthly or annual fee, you can then pay a set service fee each time an appliance or system fails.

In general, you don't need a home inspection or maintenance records to buy coverage. And it doesn't matter if your home is brand new or 50 years old.

How Does a Home Warranty Work?

After you choose a plan, service fee, and any add-on coverage, you pay upfront for the entire year or set up monthly payments. Most companies have a waiting period of 15 to 30 days after you buy the plan before coverage takes effect.

Once that waiting period is over, you're free to start using the home warranty. If you bought or were given a home warranty as part of a real estate transaction, your coverage typically starts when you close on your new home.

While the specifics depend on the company, here's a general rundown of how a home warranty works:

  1. If a covered appliance or system breaks down, you submit a claim with your home warranty company either online or by phone. Most companies have 24/7/365 customer service representatives ready to help you.
  2. Your home warranty company chooses a service provider.
  3. The service provider contacts you to set up an appointment.
  4. The technician comes to your home to diagnose the problem. If it's covered, the technician repairs or replaces the item.
  5. You pay the service fee to your home warranty company or directly to the technician (depending on your plan). The home warranty company covers the rest.

What Does a Home Warranty Cover?

A home warranty covers eligible appliances and systems in new and pre-owned homes. Many home warranty companies offer three types of plans, including:

  • Appliance plans (e.g., washer/dryer, dishwasher, and refrigerator)
  • Systems plans (e.g., air conditioning, heating, plumbing, and electrical)
  • Combo plans that cover everything included in the appliance and systems plans

Most companies allow you to add coverage for specific items not covered under the appliance or system plan. Add-ons include pools, spas, lawn sprinkler systems, additional appliances (such as a second air conditioner or refrigerator), wells, and septic systems.

Average Home Repair Costs
Source: Home Advisor. Investopedia / Julie Bang

What Doesn't a Home Warranty Cover?

While a home warranty can provide coverage in case home appliances or systems break down or fail due to normal wear and tear, warranties are not designed to replace existing homeowners insurance policies and they do not cover homeowners against many of the perils that are covered by homeowner policies. For example, warranties are not meant to cover repairs to a home's foundation or its structure due to accidents, nor do they cover homeowners against liability if someone gets hurt on their property.

Additionally, home warranty plans have coverage limits or caps. For example, you may be covered for up to $2,000 per year per appliance, with an annual claim limit of $15,000. Take a close look at the fine print to be sure you understand what's covered by the plan and the limits that apply. This may be especially important if you have higher-end appliances and systems. 

Many (but not all) home warranty companies will also deny claims if an appliance or system:

  • Was not installed correctly or maintained properly
  • Was not used properly
  • Does not meet local building codes
  • Had a known or unknown pre-existing condition when you bought the warranty

What Does a Home Warranty Cost?

There are two costs to look at when you compare home warranty plans: the service fee and the monthly (or annual) cost.

The service fee is the amount you pay each time you request service. These fees typically range between $55 and $150. Depending on the company, you can choose from one, two, or three service fees. In general, the lower the service fee, the more expensive the plan.

If you need more than one type of technician for the same issue—for example, you need a plumber and an electrician to work on a water heater—you may owe two service fees.

The monthly or annual cost is the amount you pay to have access to the "discounted" service calls. These costs range from about $350 to more than $1,100 a year, depending on the plan, service fee, house size, and where you live.

Are Home Warranties Worth It?

Whether a home warranty is right for you depends on a number of factors, including the age of your home, the quality of your appliances, and your own repair skills.

In a recent interview with Chad Marzen, a home warranty expert and an American General Insurance Associate Professor of Insurance Law, he explained that "If an individual has the funds to self-insure their appliances, then a home warranty may not necessarily be as pressing as the situation where maybe you are on a really tight budget and anticipate that an appliance may be in the last year or two or three of running. That might be more worth it for the consumer to get a home warranty to provide peace of mind. So, the issue of home warranties is a question of your risk tolerance for large expenses."

Every appliance and home system eventually breaks down. If you're handy, you might be able to do repairs yourself and save money. Many homeowners, however, don't have the skills, tools, time, and patience to do their own repairs. In these situations, a home warranty can make financial sense. Here's why: According to the "1% rule," you should set aside at least one percent of your home's value each year to cover maintenance and repairs. For example, if your home cost $200,000, you should budget $2,000 a year for maintenance. Another rule—the "square foot rule"—advises you to budget $1 per square foot. So, if your home is 2,000 square feet, you should set aside $2,000 a year.

The annual cost of a home warranty could be well under those guidelines, even if you use the service several times a year. Say you have a $200,000 home and want to set aside the recommended $2,000 a year for maintenance. Now, assume you buy a home warranty instead. If the plan costs $500 a year and you have a $100 service fee, you could make 15 claims before reaching that $2,000 threshold.

Of course, there's no way to tell if you would use the $2,000 you set aside—and if not, you can save it for the next year. Likewise, you can't predict if you'll use a home warranty if you buy one. Still, a home warranty often ends up saving money in the long run. And it can certainly help you budget and provide peace of mind.

Methodology

To review offerings available, we developed a home warranty review methodology that accounted for elements like coverage area, price, and service. We wanted to recommend companies that had broad coverage throughout the majority of the U.S. while keeping pricing in line with industry standards. We also considered the cost of trade service fees due at the time of a claim. Overall, we chose companies that priced their services fairly based on the industry norm.

We then took a deep dive into the service each company provided, assessing how customers could address a claim and whether doing so was convenient. Finally, we looked at third-party reviews to see what real customers had to say about their claims experience to determine the companies with the best reputations. In the end, we balanced price with service for the best customer experience.

Article Sources

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  1. Better Business Bureau. "American Residential Warranty." Accessed October October 16, 2020.

  2. Better Business Bureau. "Amazon Home Warranty LLC." Accessed November 3, 2020.