The national average for home warranties is $600—but with lows in the $200 range and highs in the $1000 range, there are several variables to consider. Factors like your location, claim service fees, and coverage levels have a huge impact on your costs.
Even if you have
home insurance, you might consider purchasing a home warranty plan to fill gaps in your coverage. For instance, if your electrical system or water heater breaks down, home insurance won’t cover you because the damage was due to normal wear and tear.
If you need financial protection for your home’s appliances and major systems, purchasing home warranty insurance might be the right move for you.
Before you commit to a policy, licensed
home and car insurance broker
Jerry has the insight you need to make a wise decision, including information on how much a home warranty plan costs.
What is a home warranty?
A home warranty is a service contract that extends the warranty of major home appliances and systems. It is typically a one-year contract, covering the repair or replacement of these components if there is an unexpected failure after normal use.
When you sign up for a home warranty, your policy will specify the household systems you’re covered for as well as the conditions for that coverage.
For instance, if a system or appliance is not properly maintained due to negligence, a home warranty is unlikely to provide a repair or replacement.
Systems and appliances can break even if they are well-maintained—and home warranties protect you from paying the full cost for repairs or replacement when this happens.
Who purchases a home warranty?
Whether the home’s buyer or seller purchases a warranty depends on who it benefits the most. For example, in a buyer’s market, the seller may incentivize potential buyers by offering a home warranty.
This could also protect the seller from charges levied against them should an appliance fail after a buyer moves in.
On the other hand, in a seller’s market, a seller is unlikely to purchase a home warranty with many offers to choose from. As a buyer, if you find that you underestimated the cost of unexpected repairs after moving in, it might be financially wise to purchase the home warranty.
Home warranty vs. home insurance
Home warranties and home insurance both protect components of your home, but what they cover is very different.
Home insurance is a critical investment that covers your home in the event of many natural disasters or accidents. Depending on your policy, home insurance may also cover your personal belongings or personal
liability if someone gets injured on your property.
However, home insurance doesn’t cover the cost of repairs if your fridge or stove suddenly stops working. Home warranties bridge this gap to protect you if major appliances and house systems unexpectedly fail.
What does a home warranty cover?
Like home insurance policies, home warranties offer different levels of coverage based on your situation. Most policies include coverage for:
HVAC (heating and air conditioning) systems
This isn’t an exhaustive list, so before you sign the dotted line on any policy, always make sure that your preferred coverage is included.
Types of home warranty coverage
Different home warranty packages include:
Appliance plans: This includes freestanding appliances in your home like your fridge, stove, automatic garage door systems, and more. It won’t cover smaller appliances like space heaters.
System plans: This covers major systems in your home, like HVAC, electrical, and plumbing systems. It does not include any appliances.
Combination plans: If you don’t want to choose between covering your major appliances or systems, this home warranty policy will cover both. Keep in mind that even combination plans have varied levels of coverage.
Add-ons: Standard home warranties typically don’t include pools, spas, well pumps, septic tanks, or appliances in guest houses, but you can get add-on policies to meet your needs.
What isn’t covered by a home warranty?
Home warranties don’t cover your home in the event of a natural disaster, explosion, or other emergency—that’s what
home insurance is for.
Generally, home warranties will only cover appliance or system failures due to normal wear and tear. They won’t cover appliance or system failures based on the following conditions:
Poor maintenance or installation
Pre-existing conditions (known or unknown)
Several items are excluded from a typical contract, such as your television, alarm systems, sprinkler systems, countertop appliances, and ornamental fountains.
There are always exceptions to these rules, as every home warranty policy is different. Always discuss your coverage limits with your home warranty company before making a decision.
How much is a home warranty?
The national average price for a home warranty policy is $600 a year, although prices range from around $200 to $1,000 a year or more.
Most insurance policies require you to make a single payment monthly or annually. Home warranties, on the other hand, require you to pay both premiums and service fees.
A home warranty premium is what you pay for home warranty coverage. You usually have the option to choose how you want to structure your payments—monthly, annually, or quarterly.
On top of your premium, you need to pay a fee whenever a professional visits your home for an inspection or repair. Your chosen coverage impacts how many times you’ll incur a service and how much it will cost you, but prices usually range between $55 to $150 per visit.
Key Takeaway In addition to home warranty premiums, you’ll need to pay for service call fees if you need a repair or replacement.
Benefits of home warranties
Knowing your systems and appliances are protected can give you peace of mind, especially if you’re not used to dealing with repairs.
Plus, you’ll have to deal with fewer unexpected costs with a home warranty on hand—so you don’t have to tap into your vacation fund if your refrigerator suddenly breaks.
A home warranty may be particularly beneficial for you if you:
worry about the cost to replace expensive home systems
are tired of feeling like contractors are ripping you off
Home warranties work with vetted providers who take care of repairs or replacements for less money upfront than independent contractors.
While less stress and more savings might sound like a good deal, a home warranty isn’t right for absolutely everyone. For instance, if you have brand-new appliances and already know contractors you trust, it might not make sense to take on the extra expense of a home warranty.
Do I need a home warranty?
You might not need a home warranty if you have existing warranties for your home systems and appliances. If you have a new HVAC system or you just purchased a new fridge, they could still be covered under the manufacturer’s warranty.
However, if you want to protect yourself from paying thousands for unexpected repairs, then it’s worth considering a home warranty.
When you make a claim on your policy, the home warranty company will send out an approved contractor to complete an inspection and make the repair or replacement. This means that you don’t get to choose your contractor when you need a repair.
There are also coverage limits—so if you purchased the best smart fridge money can buy, you might get something much simpler as a replacement. You won’t necessarily have much say over the brand, either.
Key Takeaway If you are handy with repairs or your appliances already have manufacturer’s warranties, a home warranty policy might not be the right decision for you.
Tips for making a home warranty claim
Here’s what you should do if you need to file a home warranty claim for a system repair or replacement:
Initiate a service request. Contact your home warranty company and explain the issue. Jot down the brand and model number of your appliance(s) to simplify this process.
Schedule your appointment. Your home warranty company will have a vetted provider contact you to set up an appointment.
Don’t attempt to fix it yourself. Your service provider will diagnose the problem and determine if you need a repair or replacement. If you attempt to fix things yourself, it might look like the appliance was intentionally damaged.
Pay the service fee. Every time you make a claim, you’ll pay a small service fee just like you would pay a deductible.
If you’re not sure whether to file a claim, ask for help. If you’re having trouble with an appliance, call the manufacturer to explain the issue first. If they have a simple solution, it might save you the cost of making a claim.
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Find the right home insurance
Even if you decide the cost of a home warranty doesn’t merit purchasing a policy, don’t skip out on protecting yourself with
home insurance. If you don’t want to take the time to find and compare home insurance quotes yourself, licensed broker
Jerry can do the hard work for you.
Jerry generates competitive quotes from top providers in less than a minute. Just select the policy you like best, and Jerry will help get you registered!
If you have any questions along the way, just text one of our agents through the app. They will always be there to assist you.
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