A home warranty is a service contract that covers repair or replacement of major home systems and appliances when they break down due to normal wear and tear. It costs $400–$900 per year — and whether it’s worth it depends on your home’s age, your financial cushion, and how carefully you read the exclusions.
How a Home Warranty Works
- You pay an annual premium ($400–$900) to a home warranty company
- A covered item breaks down — HVAC stops working, refrigerator fails, water heater dies
- You call the warranty company — they dispatch a pre-approved service contractor
- You pay a service call fee ($75–$125) when the technician arrives
- The warranty company pays for approved parts and labor — if the claim is covered
The appeal: a major HVAC replacement can cost $4,000–$10,000. A home warranty converts that unpredictable expense into a predictable annual cost.
What Home Warranties Typically Cover
Standard plans (usually $400–$650/year):
- HVAC systems (heating and cooling)
- Electrical panel and wiring
- Plumbing (pipes, fixtures, water heater)
- Kitchen appliances (refrigerator, dishwasher, range/oven, microwave)
- Washer and dryer
Premium/comprehensive plans ($700–$1,200/year): Everything in standard, plus:
- Pool and spa equipment
- Roof leak repair
- Garage door opener
- Ceiling fans
- Additional refrigerators or appliances
- Well pump or septic system
What Home Warranties Do NOT Cover
This is the fine print that matters:
- Pre-existing conditions — problems that existed before the coverage start date
- Improper installation or modifications — work done without permits or outside code
- Lack of maintenance — a claim can be denied if the failure is attributed to neglected maintenance (dirty filters, clogged drains, etc.)
- Cosmetic damage — dents, scratches, discoloration
- Secondary damage — if a covered leak causes water damage to flooring, the flooring typically isn’t covered
- Items not listed — only the specific systems and appliances named in your contract are covered
Always read the exclusions section — home warranty contracts are known for complex language that limits coverage in ways buyers don’t expect.
Home Warranty Costs 2026
| Plan Type | Annual Premium | Service Call Fee | Best For |
|---|---|---|---|
| Appliances only | $300–$450 | $75–$125 | Newer home, older appliances |
| Systems only | $350–$500 | $75–$125 | Newer home, older HVAC/plumbing |
| Combo (standard) | $450–$700 | $75–$125 | Most homeowners |
| Premium/comprehensive | $700–$1,200 | $75–$125 | Older homes, full coverage |
| Add-ons (pool, well, septic) | +$100–$200/yr | Same |
Annual cost of ownership example: $650 premium + 2 service calls at $100 each = $850 per year. If those 2 calls result in covered repairs worth $1,500+, the warranty paid off. If covered repairs total $300, it didn’t.
Leading Home Warranty Companies (2026)
| Company | Annual Price Range | Best For |
|---|---|---|
| American Home Shield | $400–$900 | Coverage breadth, known brand |
| Choice Home Warranty | $400–$700 | Budget pricing |
| First American Home Warranty | $450–$750 | Customer service ratings |
| AFC Home Club | $350–$600 | Flexibility |
| Select Home Warranty | $350–$600 | Low service fee options |
American Home Shield is the largest company and covers more unusual breakdowns (including older systems with rust/corrosion). Choice Home Warranty is typically the most price-competitive but has more claim denials in consumer complaints.
Before buying, check:
- BBB rating
- Consumer Affairs or Trustpilot reviews filtered by “claim” experience
- State insurance department complaint ratios
Is a Home Warranty Worth It?
Worth it if:
- Your home is 10+ years old with original HVAC, water heater, or appliances
- You’re buying a home with unknown maintenance history (as-is sale, estate sale, foreclosure)
- You lack a $5,000–$10,000 emergency fund to cover a major unexpected repair
- You’re a first-time homeowner nervous about surprise repair costs
Not worth it if:
- You have a builder’s warranty on new construction (typically 1-year workmanship, 2-year systems, 10-year structural)
- You have a well-funded emergency savings account
- Your systems and appliances are recent (under 5 years old) with manufacturer warranties still active
- You want to choose your own contractors (home warranties require you to use their pre-approved vendors)
Alternative to a Home Warranty: Self-Insurance
Instead of paying $650/year in warranty premiums, some homeowners deposit that amount into a dedicated home repair fund. Over 10 years, that accumulates $6,500+ (plus interest) — enough to cover most mid-range repairs without the service fee, contractor restrictions, or claim denials.
This strategy works well for homeowners with well-maintained newer homes. For older homes with aging systems, the warranty can pay off in the first year if a major system fails.
Before You Buy: Questions to Ask
- What is the service call fee per visit?
- Is there a cap on HVAC repair or replacement costs?
- Are pre-existing conditions covered after a waiting period?
- Can I choose my own contractor, or must I use yours?
- What is the cancellation and refund policy if I move?
- Are there waiting periods before coverage begins? (Standard is 30 days)
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