How We Review Home Warranties
In order to identify the best home warranty companies available, we considered a variety of factors that we considered crucial in evaluating the quality and value provided by the major home warranty providers in the U.S. With the help of our research team, subject matter expertise and consumer survey input we determined the categories and features that would most efficiently help us objectively judge companies on a standalone basis as well as relative to one another based on four major categories and 18 features.
Below are these four major categories and the features we used for each to rank companies with our scoring system and provide our take on how companies stack up for our readers.
- Average cost of plan
- Service fee range
Coverage and Support
- Waiting period
- Claim response times
- Payout cap
- States available
- Number of claim filing channels
- Number of customer support channels
- Plans for realtors
- Plans for home sellers
- Contract length range
- Customizable coverage
- Can use own repair person
- Free cancellation available
- Plan pricing available online
- Sample contract available
- Exclusion information available
- Dispute resolution information available
We collected detailed data on the top 25 companies in the home warranty industry that represent the vast majority of the overall market share. For those 25 companies we collected data online and through direct company phone and email contact across a total of 35 scoring criteria for a total of 875 data points.
We also surveyed 538 consumers that were screened based on whether they currently had coverage or had coverage in the past. We also included those who were potentially interested in purchasing home warranty coverage in the future. We asked consumers to rank which home warranty features they found most important. The features that respondents reported as most important involved the cost of coverage and service fees, so we placed more emphasis on those results when determining our final scores.
|Percent ranking feature as important|
|Cost of plan||74%|
|Service fee amount||63%|
|Claim response time||48%|
|The service is available in my state||48%|
|Pricing information is available online||46%|
|Payout cap amount||44%|
|Free plan cancelation||43%|
|No waiting period before plan coverage begins||42%|
|Ability to use out-of-network repair technician||38%|
|Range of contract length||32%|
|Customizable coverage with add-ons||27%|
|Sample contract is available online||23%|
|Exclusion information is available online||22%|
|Dispute information is available online||17%|
|Convenience of claim filing channels||17%|
|Convenience of customer support channels||15%|
We scored each company on the four broad areas that include cost, customizability/flexibility, coverage and support and transparency, using our collected data and the expert analysis of our research team.
For the features on which we gathered data on we created a score value that ranged from a minimum of 0.00 point to a maximum of 1.00 point, with fractional scores awarded between 0.00 and 1.00 point when appropriate.
Then, in order to generate the star ratings you see in our reviews, we weighted the scores of 18 of the most important of the 35 features for which we collected data that we felt were critical in consumer decision making and where the data showed meaningful variance between companies.
Below are the general categories we looked into while reviewing each company and how we analyzed each one.
Cost (31.48% category weighting)
- Average cost of plan in most populous states - California, Texas, New York and Florida (22.19%)
- If no coverage in those states then average plan cost in states served was gathered from companies
- Service fee range (9.29%)
Coverage and Support (31.18% category weighting)
- Waiting period (5.84%)
- Claim response times (7.46%)
- Payout cap (7.88%)
- States available (6.12%)
- Number of claim filing channels (1.42%)
- Number of customer support channels (1.39%)
- Plans for realtors (0.53%)
- Plans for home sellers (0.53%)
Customizability/Flexibility (19.72% category weighting)
- Contract length range (4.91%)
- Customizable coverage (4.22%)
- Can use own repair person (6.19%
- Free cancellation available (4.40%)
Transparency (17.61% category weighting)
- Plan pricing available online (5.56%)
- Sample contract available (4.40%)
- Exclusion information available (4.66%)
- Dispute resolution information available (2.99%)
Cost of Plan
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 annual plan prices as low as $423 and as high as $892.
Specific coverage amounts and coverage limits are part of the reason for this variation in price. We also found that the claims service fee can affect the price. A claim service fee is a payment that is due when a service technician arrives to diagnose the problem. These fees typically start as low as $50 and move up in increments of $25 to $75, $100 and/or $125. Some companies charge a single service fee, which can range from $75 - $100, typically.
Since service contracts involve making monthly payments to provide coverage and can be a material expense for many consumers it is not surprising that our survey respondents ranked cost as a critical factor in deciding between home warranty companies. While some companies operate in all 50 states and others only in a few states we decided it would provide the best pricing representation to gather data from the four largest states - New York, Texas, Florida and California, as that would illustrate what most consumers pay.
Home warranty plans also typically come with different levels of coverage, each with its own scope of coverage and associated cost. In order to determine the overall cost per company we averaged the cost in each of the four states for all plan levels and then averaged the totals for those states.
Coverage and Support
Coverage and support features we evaluated included the types and tiers of plans offered, whether there was a waiting period involved before consumers could file a claim after signing up for coverage, claim response times, payout caps and the channels available to consumers when filing a claim or making inquiries. The number of states where the company offered coverage was also a factor in how we rated the provider, with companies that provided true 50-state nationwide coverage being assigned a full point in our scoring model.
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 $1,000 per claim item to as great as a $50,000 aggregate coverage limit per plan year.
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. Several companies offer large aggregate payout caps per year in combination with or rather than per item caps. We consider those offering large aggregate caps to have a more consumer-friendly policy that can avoid unexpected out of pocket costs and we score these companies higher as a result. Companies that significantly limit the amount a homeowner could receive in total or in any one claim, especially for major systems like HVAC, plumbing and electrical, received the lowest scores.
Claim Response Times
Time is of the essence when a major system or appliance malfunctions like a heating or air conditioning fails or a refrigerator stops cooling, but claim response 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).
Since the amount of time it takes to set your claim in motion and for repairs to be made can severely impact your day-to-day life, with situations like unpleasant temperatures in your home, non-working lavatories or loss of perishable foods, we placed significant weight on claim response times. We collected data on 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.
Customizability and Flexibility
When evaluating companies on customizability and flexibility we looked at data on the length of contracts offered, whether customizable coverage tailored to the consumer was available, if it was possible to use one’s own repair person and if it was possible to cancel coverage without a penalty.
Most companies we reviewed offered multiple levels of plan coverage, sometimes along with ancillary coverage options. When companies provided truly a-la-carte coverage choices we provided a full point but if no add-on coverage was available or that coverage very limited we scored the company lower.
Ability to Use Own Repair Person
For most home-related service and repair work consumers are used to choosing their own contractors or technicians but most home warranty 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.
Some of the companies we surveyed, while allowing for use of an out-of-network technician, require preauthorization or verification that the repairperson is licensed according to nationwide appliance and systems repair standards. A few were more lenient as long as the customer’s chosen technician received clearance of estimates before ordering parts and making needed repairs.
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 full point, while those that didn't received no points. However, for companies that do allow use of an out-of-network repair technician if they were certified and/or the customer obtained preauthorization we awarded half a point.
When considering how transparent companies were in what they disclosed to the public we looked at whether pricing was clearly available for various plan levels on their websites. We also gathered and rated companies on whether they had sample contracts with exclusion information and dispute resolution processes clearly spelled out. Companies that were upfront about the states in which they operated, plan costs and coverage exclusions were scored higher than those that did not provide this information to their website visitors.
A plan exclusion is a typical contractual component in a home warranty plan that eliminates the coverage liability for certain items or allows a company to refuse to pay for a repair or replacement for certain systems or appliances or for related elements such as plumbing lines or ductwork. As an example, while a water leak is usually covered under most home warranty plans, you could find an exclusion in the contract that states that a broken drain line or a hole in the roof is not.
Since most home warranty companies have a list of plan exclusions, we performed in depth research to understand each company’s coverage and the things they disallowed. When available online we studied each home warranty company’s sample contract to help you know exactly what kind of coverage you are actually paying for, along with the exclusions a consumer might encounter when when filing 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 so 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 standard list of exclusions but others are more lenient and a few even cover pre-existing conditions. We scored companies that were upfront with their exclusions higher than those who were not.
Plan Pricing Available Online
We believe that companies that are upfront about their plans and costs are best for consumers and those that are opaque should be avoided. This was another category that was binary so we awarded companies with upfront pricing a full point and those that were not zero points.
One of the better ways to gauge the reliability of a home warranty company is to review the number of complaints and customer feedback ratings from their real world experience.
If a company isn’t living up to their promises, we look at customer reviews in order to detect patterns of complaints and experiences so that we can provide our readers with an unbiased view into what they can likely expect when choosing a home warranty company. When you do purchase home warranty service, we want you to have the ability to do so with confidence.
Our focus is on real consumer reviews and complaints and, importantly, how each company chooses to respond to customer concerns. To gauge customer satisfaction we sourced Better Business Bureau (BBB) customer reviews for each company and gave stronger scores to those based on rank ordering of review scores. Also, companies that had more reviews received higher scores. Second, we surveyed 538 consumers to determine their experiences with each of the companies we evaluated to better understand consumer opinions and to look for patterns of how companies handled customer claims and disputes.
While we didn't specifically score companies based on their customer satisfaction rating or consumer reviews we still think it is important to surface other consumers' experiences to help our readers in their decision process.
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 to learn more.
Ben is the Associate Editorial Director, Financial Products and Services for Investopedia and is responsible for the news, education and rating methodologies that Investopedia creates around the various products and services it reviews.
Ben has over 30 years of experience in financial services and has spent his career in marketing, operations and content management roles for banks, credit card issuers and credit card marketplace websites, including CreditCards.com and Bankrate.com. His area of specialization over the past 20 years has been credit cards.
Hannah has been conducting research for over a decade, with a recent focus on providing data-driven recommendations from synthesizing quantitative data with qualitative data on services and products across finance, health, and lifestyle.
Prior to joining the Performance Marketing team as a Research Associate, Hannah conducted research for Fortune 500 companies and multinational biotech companies including Pfizer, Johnson & Johnson, and Takeda. Her experience leading rigorous studies for FDA reviews shaped her standard of research integrity which guides her work at Performance Marketing.