Best Home Warranty Companies

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A home warranty is a service contract that helps cover repair and replacement costs for home appliances and systems that break down due to normal wear and tear. In exchange for a monthly or annual premium, policyholders get discounted service calls for specific household appliances and systems during the coverage period. Home warranties can give homeowners peace of mind and help reassure buyers and sellers during real estate transactions.

If you're shopping for a home warranty, look for a home warranty company that offers reasonable premiums and service fees, high payout caps, an easy claims process, and a flexible range of plans that include the appliances and systems you want to cover.

Best Home Warranty Companies of 2022

Below are Investopedia's top-rated home warranty providers with pricing, coverage and availability details, which can vary by state.
Company Investopedia's Rating Average Annual Cost of Plan Service Fees Payout Cap
Payout Cap is the maximum amount a home warranty company will pay for claims made during the coverage period, either on a per item basis or in total, as detailed in the home warranty agreement.
Pricing Available Online
Pricing Available Online refers to whether the home warranty company provides the monthly or annual cost of various plan levels along with coverage details on its website without requiring personal information to be entered.
Claim Response Time
Claim Response Time is the time estimate quoted by the home warranty company to respond to a customer claim. This includes sending out a network technician to diagnose the claim issue and determine coverage eligibility.
Pros & Cons, Overview, etc.
American Residential Warranty
4.7
Best Overall
$554.88 $55 - $75 $2,500 per item Yes 24 - 48 hours Read More
Home Warranty Inc
4.6
Best Overall Runner-Up
$479.33 $75 $15,000 Annual Yes 4 - 48 hours Read More
First Premier Home Warranty
4.3
Best for Claim Response Time
$424 $60 - $75 $15,000 Annual No 20 hours Read More
Cinch Home Warranty
4.2
Cheapest Plan Cost for CA, FL
$567.49 $100 - $150 $10,000 Aggregate No 2 - 24 hours Read More
Liberty Home Guard LLC
4.1
Best for Customer Satisfaction
$587.49 $80 - $125 $2,000 per item No 24 - 48 hours Read More
America's Preferred Home Warranty
4.0
Best Low Service Fee
$517 $50 - $100 $25,000 Annual No - Read More
Sears Home Warranty
3.6
Best for Highest Payout Cap
$719.88 $75 - $100 $50,000 Annual No 2 - 24 hours Read More
TotalProtect Home Warranty
4.6
Best Average Plan Cost
$423.40 $75 - $125 $3,000 Annual Yes 2 - 24 hours Read More
Why Trust Us Investopedia collected key data points from several home warranty providers to identify the most important factors to customers. We used this data to review each provider for cost, availability, coverage options, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Read our Full Methodology
38 Providers reviewed
35 Criteria considered
875 Data points analyzed
59 Primary data sources used

Best Overall : American Residential Warranty

Investopedia's Rating
4.7

American Residential Warranty Logo
  • Average Annual Cost: $554.88
  • Service Fees: $55 - $75
  • Response Time: 24 - 48 hours
Why We Chose It

American Residential Warranty is our top pick overall because of its transparent pricing, reasonable costs, low service fees, and customizable plans. Coverage is available nationwide, and the company has strong customer review ratings with third-party sites. American Residential Warranty earned the highest overall rating of 4.7 stars of the 25 companies we evaluated.

Pros & Cons
Pros
  • Low costs for some plans

Cons
  • Washer & dryer coverage costs extra on every plan

  • Low annual limits on some appliances and systems

Plans & Pricing

American Residential Warranty offers policies in all 50 states. The average plan costs $555, according to our research, with a payout cap of $2,500 per year per covered appliance or system. The company reports that it starts service within 48 hours of a service request (within 24 hours for emergency issues).

American Residential Warranty offers three basic plans:

  • Kitchen Plus: built-in microwave, dishwasher, garbage disposal, interior electric system, kitchen exhaust fan, range/oven/cooktop, refrigerator (excluding ice maker), and water heater
  • Platinum Premier: everything the Kitchen Plus plan covers plus central air conditioning, central home heating, humidifier, ceiling fans, ductwork, garage door opener, plumbing stoppages (fixtures not included), and plumbing system (fixtures not included)
  • , range hood, and refrigerator ice maker
  • 4-in-1 Bundle: everything the Kitchen Plus plan covers plus washer/dryer, water/sewer lines, personal electronics, and some internal parts and mechanisms for items listed above
Coverage

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

  • A/C Advantage (refrigerant and coils)
  • Additional air conditioning system
  • Additional central home heating system
  • Ceiling fans
  • Clothes washing machine and clothes dryer
  • Deluxe Advantage Package
  • Food spoilage
  • Ice maker (in refrigerator or standalone)
  • Plumbing Advantage (faucets and fixtures)
  • Plumbing system (does not include fixtures or clogs)
  • Range/oven/cooktop
  • Second refrigerator/freezer (does not include ice maker)
  • Spa only
  • Swimming pool and spa
  • Swimming pool only
  • Water heater
  • Washing machine & dryer
Read the full American Residential Warranty Review 2022

Best Overall Runner-Up : Home Warranty Inc

Investopedia's Rating
4.6

Home Warranty Inc.
  • Average Annual Cost: $479.33
  • Service Fees: $75
  • Response Time: 4 - 48 hours
Why We Chose It

Home Warranty Inc. is our Best Overall Runner-Up because it has an easy-to-use website with clear pricing information, a good selection of plans and add-ons, and a faster-than-average claim response time. The company offers policies in 35 states and has an A+ rating with the Better Business Bureau. Home Warranty Inc. scored second in overall points to American Residential, making it a solid choice to consider when shopping for home warranty coverage.

Pros & Cons
Pros
  • No limitations on square footage

  • Pick your own technician

Cons
  • Low annual limits on some appliances and systems

  • No coverage for damage from mold, rust, or corrosion

Plans & Pricing

The average Home Warranty Inc. plan costs $480, with an aggregate payout cap of $15,000 per contract period (typically 14 months). The company says it responds to claims within four hours on weekdays and 48 hours on weekends, with an average response time of 26 hours. 

Home Warranty Inc. offers three basic plans (price depends on the plan you choose and your zip code):

  • Home Protection: heating units, cooling units, air exchanger, ductwork, water heater, interior plumbing, plumbing stoppages, interior electrical wiring, sump pump, garbage disposal, central vacuum, garage door opener, trash compactor, built-in or over-the-range microwave, refrigerator, built-in ice maker, dishwasher, range/oven/cooktop, and washer/dryer
  • Appliance Protection: an à la carte plan that lets you choose the individual appliances and mechanical systems you want to cover 
  • Supplemental Home Protection: enhances your existing insurance and covers 14 appliances and mechanical systems
Coverage

You can customize a plan by adding coverage for any of the following optional add-ons:

  • Enhanced HVAC Plus (additional $2,500 in HVAC coverage)
  • Jetted bathtub (doesn't include jets, bathtub shell, or liner)
  • Limited roof leak repair (30-day waiting period)
  • Limited slab leak
  • Pool or spa (covers only primary pump motor and assembly and heating system)
  • Septic tank and pump (30-day waiting period)
  • Water softener
  • Well pump
Read the full Home Warranty Inc. Home Warranty Review 2022

Best for Claim Response Time : First Premier Home Warranty

Investopedia's Rating
4.3

First Premier Home Warranty
  • Average Annual Cost: $424
  • Service Fees: $60 - $75
  • Response Time: 20 hours
Why We Chose It

First Premier Home Warranty is our pick for Best Claim Response Time due to its best in class response time of 20 minutes while other companies generally stated they could take up to 72 hours if claims were made on weekends. First Premier also offers low-cost plans, reasonable service fees, and high payout benefit limits. The company sells policies in every state except California and Iowa. It doesn't have a Better Business Bureau rating or accreditation, likely because it's a relatively new player in the industry.

Pros & Cons
Pros
  • Super fast claim response times

  • Very low-cost plans and service fees

  • $15,000 per year aggregate payout cap

Cons
  • Limited track record (est. 2020)

  • Fewer plans than competitors

Plans & Pricing

The average First Premier Home Warranty plan costs $424, according to our research, with an aggregate payout cap of $15,000 per year. The company says it responds to repair requests within 20 minutes, notably faster than any other company we evaluated. 

First Premier Home Warranty offers two plans (price depends on the plan you choose and your zip code):

  • Premier: plumbing system, plumbing stoppage, water heater, whirlpool bathtub, electrical system, range/oven/cooktop, built-in microwave, dishwasher, garbage disposal, trash compactor, ductwork, garage door opener, ceiling and exhaust fans, and sump pumps 
  • Premier Platinum: everything the Premier plan covers plus air conditioning system (two units), heating system (two units), refrigerator, and washer/dryer
Coverage

You can customize either plan with the following add-ons:

  • Additional A/C system
  • Additional garage door opener 
  • Additional spa
  • Additional water heater
  • Central vacuum
  • Ice maker (in-fridge or standalone)
  • Limited roof leak
  • Pool/spa
  • Second refrigerator
  • Septic pumping
  • Septic system
  • Standalone freezer
  • Sump pump
  • Water softener
  • Well pump
Read the full First Premier Home Warranty Review 2022

Cheapest Plan Cost for CA, FL : Cinch Home Warranty

Investopedia's Rating
4.2

Cinch Home Service
  • Average Annual Cost: $567.49
  • Service Fees: $100 - $150
  • Response Time: 2 - 24 hours
Why We Chose It

Cinch Home Services won our Cheapest Plan Cost for California and Florida category because customers in those states can buy the Complete Home Warranty plan (the company's most comprehensive coverage) for less than $500 per year. The average of all plan levels of plan costs is also lowest in those states, making Cinch the low cost winner. The company has fairly broad coverage across the U.S. with availability in every state except Alaska, Hawaii, Iowa, and Texas and has a B rating with the Better Business Bureau.

Pros & Cons
Pros
  • Protection for unknown pre-existing conditions

  • 180-day service guarantee

Cons
  • Above-average service fees

  • Above-average costs in some states

Plans & Pricing

The average Cinch Home Warranty plan costs $567, with an aggregate payout cap of $10,000 per year. The company says it responds to repair requests within 2-24 hours, which is on the faster end of the spectrum for the industry. 

Cinch Home Warranty offers three plans (price depends on the plan you choose and your zip code): 

  • Home Appliances Warranty: Washer/dryer, range/oven/cooktop, dishwasher, built-in food center, freestanding ice maker, built-in microwave, range exhaust hood, refrigerator, built-in trash compactor, wall oven, and a $25 air conditioner or water filter credit.
  • Built-in Systems Warranty: 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, and a $25 air conditioner or water filter credit, 
  • Complete Home Warranty: Everything covered by the Appliances and Built-in Systems plans plus a $500 homeowners insurance deductible reimbursement (available once per year).

All plans include a $50 Green Reward.

Coverage

You can customize either plan with the following add-ons:

  • Premier upgrade package (provides additional benefits on a covered plan)
  • Septic system (available for first-year customers only and is not renewable)
  • Spa
  • Swimming pool 
  • Swimming pool/spa combo
  • Well pump
Read the full Cinch Home Services Review 2022

Best for Customer Satisfaction : Liberty Home Guard LLC

Investopedia's Rating
4.1

Liberty Home Guard Review
  • Average Annual Cost: $587.49
  • Service Fees: $80 - $125
  • Response Time: 24 - 48 hours
Why We Chose It

Liberty Home Guard Home Warranty is our top pick for customer satisfaction because of the average Better Business Bureau customer review rating of 4.63, which involved over 1,200 verified reviews. This rating was by far and away the best satisfaction rating for any company we reviewed and reflects a strong pattern of treating their customers well. Liberty also has a very user-friendly website, transparent pricing, helpful live-chat customer service, discounts, and optional add-ons (including coverage for pro-series appliances). The company offers policies in all states except Washington and Wisconsin, and it's an accredited Better Business Bureau business with an A rating. 

Pros & Cons
Pros
  • Multi-year discounts on some plans

  • Great selection of optional add-ons

Cons
  • Can't choose your service technician

  • Lower-than-average payout benefit cap

Plans & Pricing

The average Liberty Home Guard Home Warranty plan costs $587, with a payout cap of $2,000 per year per covered appliance or system. The company tries to dispatch repair technicians within 24-48 hours of service requests. 

Liberty Home Guard offers three basic plans (price depends on the plan you choose and your zip code):

  • Appliance Guard: washer/dryer, refrigerator, built-in microwave, dishwasher, garbage disposal, range/oven/cooktop, ceiling and exhaust fans, and garage door opener.
  • Systems Guard: air conditioner, heating, ductwork, plumbing, electrical, and water heater
  • Total Home Guard: everything the Appliance Guard and Systems Guard plans cover  
Coverage

Liberty Home Guard Home Warranty offers a long list of optional add-ons to supplement its three primary plans. You can customize your plan by including coverage for any of the following:

  • Additional spa
  • Carpet cleaning
  • Casita guest unit
  • Central vacuum
  • Ejector pump
  • Electronics protection
  • Generator
  • Grinder pump
  • Gutter cleaning
  • Ice makers (in-fridge or freestanding)
  • Instant hot water dispenser
  • Lawn sprinkler system
  • Lighting fixtures
  • Limited roof leak
  • Pest control
  • Plumbing fixtures
  • Pool and spa
  • Pro-series dishwasher
  • Pro-series dryer
  • Pro-series microwave
  • Pro-series range/oven/cooktop
  • Pro-series refrigerator
  • Pro-series washing machine
  • Re-key
  • Reverse osmosis water filter system
  • Saltwater pool
  • Second refrigerator
  • Septic system pumping
  • Standalone freezer
  • Sump pump
  • Swamp cooler
  • Trash compactor
  • Water dispenser water line
  • Water softener
  • Well pump
  • Window washing
  • Wine cooler/fridge
Read the full Liberty Home Guard Home Warranty Review 2022

Best Low Service Fee : America's Preferred Home Warranty

Investopedia's Rating
4.0

America's Preferred Home Warranty
  • Average Annual Cost: $517
  • Service Fees: $50 - $100
Why We Chose It

America's Preferred Home Warranty tops our Best for Low Service Fee category due to its lowest-in-industry $50 service fee option (you can also choose a service fee of $100 or $125). As the service fee goes up, the plan's monthly cost goes down, so you can design a plan that fits your situation. The company has earned an A+ rating from the Better Business Bureau. 

Pros & Cons
Pros
  • Pick your own licensed technician

  • A+ Better Business Bureau rating

Cons
  • Limited plan options

Plans & Pricing

The average America's Preferred Home Warranty plan costs $517, with an aggregate payout cap of $25,000. The company did not disclose its claim response time, stating that it varies depending on the independent contractor you choose. The company does not offer coverage in California.

While the company has flexible service fees, it offers two plans (price depends on the service fee you choose):

  • Standard Coverage: central air conditioning, heating systems, water heater, built-in dishwasher, refrigerator, range/oven/cooktop, garbage disposal, built-in microwave, septic system, attic & exhaust fans, electrical system, plumbing, stoppages, garage door opener, water well pump, roof leak repair, ductwork, and humidifier 
  • Preferred Upgrade: includes everything in the Standard Coverage plan plus air conditioning refrigerant recovery, ceiling fans, fire alarms, burglar alarms, lighting fixtures, doorbells, a $250 allowance to fix code violations, and enhanced coverage for many of the items in the Standard Coverage plan (i.e., water heater sediment buildup) 
Coverage

You can customize your plan by including coverage for any of the following:

  • Additional refrigerators
  • Gas fireplace
  • Inground pool/spa
  • Jetted bathtub
  • Preferred upgrade
  • Saltwater pool/spa
  • Sprinkler system
  • Termite control
  • Washer/dryer 
  • Water softener
Read the full America’s Preferred Home Warranty Review 2022

Best for Highest Payout Cap : Sears Home Warranty

Investopedia's Rating
3.6

Sears Home Warranty
  • Average Annual Cost: $719.88
  • Service Fees: $75 - $100
  • Response Time: 2 - 24 hours
Why We Chose It

With an aggregate limit of $50,000, Sears Home Warranty has the highest payout cap in the industry (the per-claim cap is $10,000). The company operates in the lower 48 states and has an A+ Better Business Bureau rating (via Transformco, which acquired Sears in 2019).

Pros & Cons
Pros
  • 180-day service guarantee

  • Product replacements

Cons
  • High number of customer complaints

  • Sears Holdings is still in bankruptcy

Plans & Pricing

The average Sears Home Warranty plan costs $720, with an aggregate payout cap of $50,000 per year. The company says it typically responds to claim requests within two hours (24 hours during holidays), with an average response time of 13 hours. 

You can choose from three warranty plans:

  • Appliance Plan ($49.99 per month): refrigerator with ice maker, built-in dishwasher, washer/dryer, range/oven/cooktop, built-in microwave, range exhaust fan, built-in trash compactor
  • Systems Plan ($59.99 per month): central air conditioner, central heating, plumbing system, water heater, water softener, faucets & toilets, garbage disposal, plumbing stoppages, electrical system, ceiling fans, and garage door opener
  • Whole Home Plan ($69.99 per month): everything included in the Appliance and Systems plans

All plans include one heating system and one cooling system preventive maintenance check every year at no extra cost, plus discounts on some appliance and system repairs.

Coverage

To customize your plan, Sears Home Warranty offers the following add-on coverage options:

  • Pool and/or spa with heater 
  • Septic tank with pumping 
  • Standalone freezer
  • Sump pump
  • Well pump
Read the full Sears Home Warranty Review

Best Average Plan Cost : TotalProtect Home Warranty

Investopedia's Rating
4.6

Total Protect Home warranty
  • Average Annual Cost: $423.40
  • Service Fees: $75 - $125
  • Response Time: 2 - 24 hours
Why We Chose It

With an average yearly premium of just $423, TotalProtect is our top pick for Best Average Plan Cost. The company offers coverage in all 50 states plus the District of Columbia. While TotalProtect had an excellent overall score it did have lower customer satisfaction review ratings with the Better Business Bureau than most companies we reviewed. Still, if plan pricing, especially for a basic plan, is the main consideration then TotalProtect could be the way to go.  

Pros & Cons
Pros
  • Nationwide coverage

  • Average annual plan cost of $423

  • Six-month service guarantee

  • Rapid claim response times

Cons
  • Low customer satisfaction

  • No Better Business Bureau profile

  • Relatively high service fees

Plans & Pricing

The average TotalProtect policy costs $423, with a payout cap of $1,000 - $3,000 per covered item per year. The company says it responds to repair requests within 2-24 hours, with an average time of 13 hours.

TotalProtect offers three plans:

  • ApplianceProtect ($32.99 per month with a $125 service fee per claim): washer/dryer, range/cooktop/oven, range exhaust hood, refrigerator, dishwasher, microwave, and built-in trash compactor
  • SystemsProtect: ($44.99 per month with a $125 service fee per claim): air conditioning and heating systems (two units each), accessible ductwork, electrical wiring, ceiling fans, garage door opener, smoke detectors, interior plumbing and gas lines, garbage disposal, water heater, sump pump, plumbing stoppages, whirlpool/jetted bathtub, toilets, and up to $1,200 of emergency lodging reimbursement (one claim per year)
  • TotalProtect ($54.99 per month with a $125 service fee per claim): everything covered by the ApplianceProtect and SystemsProtect plans plus homeowners insurance deductible reimbursement of up to $1,000 (one claim per year)
Coverage

Total Protect offers various add-on coverage options, including: 

  • Faucets
  • Heater for swimming pool and/or spa
  • Outside gas line
  • Outside sewer line
  • Outside water line
  • Premier upgrade package (provides additional benefits on a covered plan)
  • Septic tank/septic tank pumping
  • Spa
  • Standalone freezer
  • Swimming pool
  • Swimming pool/spa combo
  • Water softener
  • Well pump system
Read the full TotalProtect Home Warranty Review 2022

Compare the Best Home Warranty Companies of 2022

Overall Rating Best For
Average Annual Cost
Service Fees
Response Time
Payout Cap
No. of States
Pricing Available Online
Reset All
American Residential Warranty
4.7
Best Overall $554.88 $55 - $75 24 - 48 hours $2,500 per item 50 states Yes Get a Quote
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Home Warranty Inc
4.6
Best Overall Runner-Up $479.33 $75 4 - 48 hours $15,000 Annual 35 states Yes Get a Quote
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First Premier Home Warranty
4.3
Best for Claim Response Time $424 $60 - $75 20 hours $15,000 Annual 48 states No Get a Quote
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Cinch Home Warranty
4.2
Cheapest Plan Cost for CA, FL $567.49 $100 - $150 2 - 24 hours $10,000 Aggregate 47 states No Get a Quote
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Liberty Home Guard LLC
4.1
Best for Customer Satisfaction $587.49 $80 - $125 24 - 48 hours $2,000 per item 46 states No Get a Quote
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America's Preferred Home Warranty
4.0
Best Low Service Fee $517 $50 - $100 N/A $25,000 Annual 20 states No Get a Quote
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Sears Home Warranty
3.6
Best for Highest Payout Cap $719.88 $75 - $100 2 - 24 hours $50,000 Annual 48 states No Get a Quote
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TotalProtect Home Warranty
4.6
Best Average Plan Cost $423.40 $75 - $125 2 - 24 hours $3,000 Annual 51 states Yes Get a Quote
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Final Verdict 

When choosing a home warranty plan, it's essential to consider the type of coverage you need, the overall costs, and the company's claims process. It's good to research and compare several companies as coverage and rates will vary. 

American Residential Warranty is our top choice for 2022. We like its customizable plans, nationwide coverage, reasonable service fees, and A+ Better Business Bureau rating. We also like that you can choose your technician, which is a helpful feature if you want to stick with the service pros you already know.

How To Choose the Best Home Warranty

Finding the best home warranty can be tricky with so many companies and plans to consider. When you're ready to buy a home warranty, be sure to look for companies that offer:

  • Online quotes. Most home warranty companies will send a quote once you provide basic information, such as your name, email address, and zip code. If you'd rather not disclose your details, you may be able to call the company's customer service number to request a quote over the phone. 
  • A variety of plans. Be sure the plan covers the appliances and systems you want, and confirm it's offered in your zip code.
  • Reasonable costs. You'll pay a monthly or annual fee for the policy, plus a service fee every time the company dispatches a service technician. Weigh the cost of the policy against the service fee. For example, if you anticipate a lot of repairs, you might come out ahead with a more expensive policy that offers a lower service fee. 
  • Reasonable policy limits. Some home warranty companies look low-cost on paper, but that may not matter if the coverage limits are super low. Reputable home warranty companies generally cover at least $2,000 per item per year. 
  • Easy claims process. When something goes wrong, it should be quick and easy to submit a service claim, either by phone or online.

Home Warranty vs. Homeowners Insurance

Most people are very familiar with homeowners insurance, which protects against accidental damage to your home and belongings due to theft, fire, storms, and natural disasters. A home warranty covers 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. In exchange for a monthly or annual fee, you 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.

1:43
What Is a Home Warranty?

How Do Home Warranties Work?

After choosing 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 buying 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 home purchase, your coverage typically begins 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 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 Do Home Warranties Cover?

A home warranty covers eligible appliances and systems in new and existing 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 offer optional add-on 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 Do Home Warranties Not Cover?

Home warranties generally exclude anything not explicitly covered by the policy. And even if an appliance or system is protected, home warranties won't pay to repair/replace anything your homeowners' insurance policy should cover.

Home warranties also usually exclude cosmetic damage (e.g., a dent in your stainless-steel fridge), structural damage, damage from incorrect installation, pre-existing conditions, power surge damage, or anything not considered normal wear and tear (i.e., misuse or abuse).

What Are the Biggest Complaints With Home Warranties?

The most common complaint against home warranty companies is their refusal to pay for repairs or replacements. Sometimes the refusal is valid—an exclusion or "rule" explained in the fine print that the customer overlooked. However, some disreputable companies have a reputation for avoiding payouts baselessly.

Other home warranty complaints include slow response times, lousy repair work, poor customer service, and vague policy terms. Before buying a policy, be sure to read the fine print, so you know exactly what's covered—and what's not.

How Much Do Home Warranties 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. You can choose from one, two, or three service fees, depending on the company. 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 what you pay to access 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 several factors, including the age of your home, the quality of your appliances, and your own repair skills.

Chad Marzen, a home warranty expert and an American General Insurance Associate Professor of Insurance Law, told Investopedia, "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 home appliance and system eventually breaks down. If you're handy, you might be able to do repairs yourself and save money. However, many homeowners 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 is worth $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 has 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

There are several aspects to consider when evaluating a home warranty company and its coverages. To assist in your decision process, our methodology for reviewing home warranties includes a quantified scoring system that evaluates four major categories - total plan cost, coverage and support, customizability and transparency. Within those four major evaluation categories we look at 18 core features that include annual plan fees and service fees, claim response times, payout caps, states available, contract length range, customizable coverages, ability to use own repair person, free cancelation, plan pricing, plan exclusions and other plan provisions available online. We assign fractional score values ranging from 0.00 to 1.00 point for each feature and then weight those feature values according to subject matter expert advice and consumer survey importance ranking.  We also compare features for each company to industry average values determined from our data collection for the top 25 home warranty providers. Third-party ratings and customer satisfaction scores are factored in to help assess a home warranty company’s overall quality, suitability and value.