Your home is a big investment, perhaps the biggest you'll make. Although home insurance protects you from destructive events such as fires and legal responsibilities if there are liability issues, it doesn’t protect you from smaller issues such as when your water heater goes out or your dishwasher decides to stop working.
That’s where having a home warranty can really help.
Home warranties are designed to cover repair and replacement costs on major home systems and appliances and can help save you big money when something goes wrong. All home warranty companies are not created equal, however, and when you select one it’s important to get it right.
To help you find the company that’s right for you, we reviewed both national and regional home warranty companies using a numerical rating system to help you narrow down your search and find the best home warranty plan for you.
Related: See who made the top of our list of the best home warranty companies.
How We Review Home Warranties
In order to help us identify the best home warranty companies available, we considered a variety of factors and, where needed, provided each company with an overall numerical rating.
The factors we considered when reviewing home warranty plans include:
- Company longevity
- Available plans
- Plan pricing
- Plan exclusions
- Payout caps
- Repair times
- Customer service and claims
- Customer complaints
When applicable, we assigned an overall rating with one as our lowest possible rating score and five as our highest possible rating score. These scores were then weighted and totaled to provide an overall company rating from one to five stars. In total, 24 data points were weighted on the level of importance to the customer experience. Where there were limited options in a category, we may have automatically assigned two or three points to every company and rated them based on a limited scale.
Our review of a home warranty company starts with the company’s history. This includes where a company’s headquarters is located and how long it has been in business. To help you get a better idea of how the company operates, we note whether it is first and foremost a home warranty business or if the company operates under the umbrella of a parent company that specializes in something else.
Companies that have been around the longest fared better in our ratings, with those servicing customers for 11 years or more getting the best score. Newer companies with less than a year's worth of experience got the lowest score.
|Star Ratings||Years in Business|
|5-Stars (Excellent)||11 years or longer|
|4-Stars (Great)||8 to 10 years|
|3-Stars (Good)||5 to 7 years|
|2-Stars (Fair)||2 to 4 years|
|1-Stars (Poor)||1 year or less|
Most home warranty companies offer customers a selection of two or more plans. At a minimum, a home warranty company typically offers one plan to cover appliances in the home and another plan that covers major home systems, such as electrical systems, heating and air conditioning, and plumbing. Many home warranty companies also provide a combination plan, which covers both major home systems and appliances.
In addition, we found that home warranty companies often provide coverage for individual items that you can purchase for an additional cost. This optional coverage usually covers items that are not part of the regular coverage, such as swimming pools, roof leaks, additional refrigerators, and more.
When evaluating home warranty plans, we broke these plans down to see what kind of items are covered under each plan, the cost, and whether a company provides a way to combine plans or purchase coverage for items not listed as part of their normal home warranty packages.
Since almost all companies have at least two plans, we started there with a median score of three. Companies that offered more ways for customers to get tailored plans fared better in our ranking.
|Star Ratings||Plans Available|
|5-Stars (Excellent)||Four or more|
Plan pricing is the monthly price that a homeowner can expect to pay for coverage. This coverage is usually for a period of 12 months, and the coverage provided often varies depending on the price points. Home warranty plan prices can vary greatly and, during our review process, we found monthly prices as low as $45 and as high as $200.
Specific coverage amounts and coverage limits are part of the reason for this variation in price. We also found that the trade service fee can affect the price. A trade service fee is a payment that is due when a service technician arrives to diagnose the problem. These fees typically start as low as $75 and move up in increments from $75 to $100 and $125. The amount you choose then determines the amount you can expect to pay for your monthly cost. The lower the trade service fee, the higher your monthly cost.
The cost of a plan is an important thing for consumers, so we rated those who were least expensive with the highest ranking and vice versa. The price criteria were based on packaged plans and not add-on coverage.
|Star Ratings||Monthly Price|
|5-Stars (Excellent)||$29 or less|
|4-Stars (Great)||$29.01 to $39|
|3-Stars (Good)||$39.01 to $49|
|2-Stars (Fair)||$49.01 to $59|
|1-Stars (Poor)||$59.01 or more|
A plan exclusion is a contractual component in a home warranty plan that eliminates the coverage for certain items or allows a company to refuse to pay for a repair or replacement. As an example, while a water leak is usually covered under most home warranty plans, you may find that a broken drain line is not.
Since most home warranty companies have a long list of plan exclusions, we dug deep into them to understand the coverage. We studied each home warranty company’s sample contract (when available) to help you know exactly what kind of coverage you are actually paying for, along with the types of pitfalls you may encounter when you need to make a claim.
This information is critical when you want to get to the heart of what kind of coverage is offered in a home warranty plan. Home warranty companies do not cover excluded items; you will have to pay for these repairs out-of-pocket.
The best companies were not only transparent in their exclusion list but also had fewer exclusions in coverage. Most companies have a long list of nearly 700 exclusions, which became the level given the median score. Companies with longer lists got lower scores.
|Star Ratings||Plan Exclusions|
|5-Stars (Excellent)||250 or less|
|4-Stars (Great)||251 to 499|
|3-Stars (Good)||500 to 699|
|2-Stars (Fair)||700 to 999|
|1-Stars (Poor)||1,000 or more|
A payout cap is a maximum amount a home warranty company will pay for a repair or replacement. We found these amounts can differ greatly from company to company, and payout caps range from as little as $1,500 per incident to as great as a $25,000 coverage limit.
This amount not only determines how much of the cost is covered if you need a repair, it also determines how much a home warranty company will pay if you need a replacement. This is an important consideration when choosing a plan because you could find yourself having to pay out-of-pocket if a repair is not possible and a replacement is offered. For example, if a replacement refrigerator similar to the one you have costs $2,500, but the payout cap is $1,000, you will then have to pay the remaining $1,500 out-of-pocket to get the equivalent of the one that you own.
Companies that have higher cap limits did better in our review and received the highest scores. Companies that significantly limited the amount a homeowner could receive in any one claim received the lowest scores.
|Star Ratings||Payout Caps|
|4-Stars (Great)||$2,500 to $24,999|
|3-Stars (Good)||$1,500 to $2,499|
|2-Stars (Fair)||$1,000 to $1,499|
|1-Stars (Poor)||$999 or less|
You know that time is of the essence when you have a heating or air conditioning emergency or your refrigerator has given up, but repair times can vary greatly from company to company. The average turnaround time is typically around 48 hours once a service claim is made, but some companies promote they will provide service within 24 hours (or even sooner).
The amount of time it takes for repairs can severely impact your day-to-day life, with situations like unpleasant temperatures in your home or loss of perishable foods. We researched the amount of time it takes from when a claim is initially made until the moment you can expect the service technician to arrive, assess the issue, and have the problem fixed. We also checked to see how a company handles emergency repairs and what their policy is for holidays and weekends. The companies with the fastest response times received the highest scores while those that took up to 72 hours to get a technician to the home received the lowest scores.
|Star Ratings||Repair Times|
|5-Stars (Excellent)||Same day|
|4-Stars (Great)||24 to 48 hours|
|3-Stars (Good)||48 to 72 hours|
Customer Service and Claims
When a homeowner needs to make a service claim, they don’t want to wait on hold or talk to a series of different customer service representatives before they reach someone who can help solve their problem. We report on how to make a claim, as well as how easy or difficult it is, and how the claim process works.
It is important to remember that some companies require homeowners to use an in-network service technician otherwise they may refuse to pay the claim. If you wish to choose your own service technician, you should ask about this when you make the claim to ensure that you will have coverage.
In terms of scoring, this category was a yes/no condition, and those companies that gave consumers the option to choose their own repair technician received a five, while those that didn't received a four.
|Star Ratings||Customer Service and Claims|
|5-Stars (Excellent)||Allows customers to choose their own service technician. (Not standard for industry)|
|4-Stars (Great)||Does not allow customers to choose their own service technician. (Standard for industry)|
One of the best ways we know to truly understand the reliability of a home warranty company is to look at the number of complaints and what their customers are saying about their experience.
To do this, we look at a company’s rating with the Better Business Bureau (BBB) to see what is really going on behind the scenes. If a company isn’t living up to their promises, we look at customer reviews to let you know exactly why. When you do purchase a home warranty, we want you to have the ability to do so with confidence.
It is important to note that you should not rely exclusively on the Better Business Bureau's rating system, since companies can pay to have an accredited BBB rating. Our focus is on real consumer reviews and complaints and each company's responses to these concerns.
Home warranty companies that did best in our review had an A- score or better with the BBB. While none of the companies on our list got a D or an F, we used that as the lowest possible score since a string of complaints can change a score dramatically.
|Star Ratings||BBB Rating|
|5-Stars (Excellent)||A+ to A-|
|1-Stars (Poor)||D to F|
Choosing the Right Home Warranty Company for You
When it comes to home warranty plans, it isn’t one-size-fits-all. Depending on your personal needs, you may prefer a higher monthly payment to get a lower trade service fee, or you may not care as much about the monthly fee, but have concerns about payout caps or exclusions.
We review each company for you, so you can find the best deal out there that meets your specific requirements. We also show you how a home warranty company stacks up to its competition to help you make the best choice.
To find out which companies ranked the best in our reviews, check out The Best Home Warranty Companies of 2020 to learn more.