A home warranty, also known as a home protection plan, is an annual service contract that covers major appliances and systems in your home when they break down due to normal wear and tear. This type of protection from one of the best home warranty companies can save you from paying expensive, out-of-pocket costs on repairs and replacements.
Is a Home Warranty Worth it?
Since you can’t predict when your home systems or appliances will fail, a home warranty is definitely worth it. This type of home protection plan will provide peace of mind if a major home item fails and it will prevent you from spending hours searching for a trusted contractor in your area to complete repairs.
If you’re purchasing a new construction home, a home warranty might not be necessary. That’s because your home will come with brand new appliances and systems that are covered by a manufacturer’s warranty. A manufacturer’s warranty protects appliances if they fail due to defective materials or faulty workmanship.
Manufacturer’s warranties are typically only in effect for a year or two, and they don’t cover systems and appliances that break down due to normal wear and tear, so it might be a good idea to invest in a home warranty once the manufacturer’s warranty expires.
We recommend buying a home warranty if:
- you want to limit the amount you pay out of pocket for repairs or replacements of home systems and appliances.
- you own an older home.
- you’re a first-time homebuyer and want protection for all of your systems and appliances.
- you’re planning on selling your home and want to entice potential buyers.
- you’re new to an area and don’t know any local repair technicians.
Are Home Warranties Worth the Money?
While you’ll have to pay an annual premium for a home warranty, the benefits can far outweigh the repair costs. You may end up recouping every penny you paid for the home warranty with just one service call a year.
For example, the average cost to repair a water heater is $546. If you paid a $300 premium for your warranty and a $100 service fee for a water heater repair, you would still have $146 that could be pocketed for other home expenses.
Note: Most home warranty plans include coverage caps on different home systems and appliances. For instance, the standard coverage cap on a refrigerator is $1,305 and the average cost of a new refrigerator is $1,925. Your home warranty would cover $1,305 of the new appliance and require you to pay the remaining $620, which is a pretty good deal considering you’re getting a new appliance for a third of the original price.
Benefits of a home warranty
Here are a few benefits you’ll get when investing in a home warranty:
- The peace of mind that comes from knowing you won’t have to pay the full cost of a repair or replacement when a covered system fails
- Access to a network of experienced, pre-approved service providers, saving you the hassle of locating a trusted local contractor
- The convenience and simplicity of just one phone number or website to turn to when you need service on an appliance or home system
Annual Home Warranty Cost Calculator
Our team created a calculator to break down the estimated annual cost of owning a home warranty. Enter your monthly premium, service call fee, and estimated number of claims to see your projected annual cost. It’s best to request a quote directly from one of our recommended providers, as annual costs and service fees vary between them.
Lifespan and repair cost data sourced from InterNACHI and Home Depot
Home Warranties vs. Homeowners Insurance
Don’t confuse a home warranty with home insurance. Though both policies protect your home, they cover different items. A home warranty covers systems and appliances in your home when they stop working due to normal wear and tear, whereas homeowners insurance is designed to protect you financially when your home suffers damage from a catastrophic event, such as a natural disaster or fire.
For example, if lightning strikes your house and a resulting power surge fries your refrigerator, you would contact your home insurer for coverage. However, if your fridge needs a repair because of normal wear and tear, you would contact your home warranty company for a fix.
Homeowners insurance is required while a home warranty is completely optional. However, it’s a good idea to invest in a home warranty because of the cost savings you could receive over time on unexpected repairs and replacements.
What Does a Home Warranty Cover?
In general, a home warranty covers whole-home systems and appliances, such as:
- Air conditioning
- Heating
- Plumbing
- Electrical
- Kitchen appliances, like the refrigerator, dishwasher, oven, and built-in microwave
- Clothes washer and dryer
- Garage door opener
The best home warranty companies provide a choice of two or more tiers of warranty plans. The most common plans are systems plans, appliance plans, and combination plans. In general, companies will also allow you to add on coverage for items such as a central vacuum or pool pump.
How Much Does a Home Warranty Cost?
Before you purchase a home warranty, consider the costs that come with these protection plans.
- Premium—The premium is the monthly or annual fee you pay the home warranty company. The premium will vary depending on factors such as the level of coverage you sign up for and where you live. The cost of a home warranty averages between $300 and $600 a year.
- Service fee—The service fee is the fee you’re charged when a service technician comes to your house to make a repair or replacement after you file a claim. It’s similar to a deductible in an auto insurance policy. Some home warranty companies like American Home Shield or America’s First Choice Home Club allow you to choose a higher service fee in exchange for a lower premium. The average service fee costs between $75–$125.
- Other costs—Most home warranty companies will charge an industry standard cancellation fee of $75 if customers cancel their plan after the first 30 days of coverage.
For the most accurate cost data, we recommend getting quotes directly from the top companies in the industry:
How Does a Home Warranty Work?
Before you sign up for a home warranty, it might be worth getting a home inspection to verify that systems are properly installed and maintained. The home inspection report may also indicate which appliances are nearing the end of their expected lives, so you can get a better idea of which items need the most protection.
Once coverage begins (typically after 30 days of signing a contract) and a covered item quits working, you would call the home warranty company to file a claim or submit a claim online. Once the claim is approved, the company will arrange for a pre-approved service provider to come to your home within 48 hours to assess the problem.
If possible, the technician will make the repair immediately. If a replacement is necessary, the technician will schedule a follow-up appointment to complete the replacement.
Our Recommendation: Cinch Home Services
With over 40 years of experience in the industry, Cinch Home Services is a home warranty company that looks to make home warranty services more simple. Cinch offers three protection plans that come with notable benefits, including a 180-day workmanship guarantee, protection for items with unknown pre-existing conditions, rust and corrosion coverage, and discounts on new appliances. All of these are excellent perks that many other home warranty companies do not offer.
The Appliances Plan starts at $27.99 per month and protects many major home appliances like refrigerators and dishwashers. The Built-in Systems Plan starts at $32.99 per month, and it covers major home systems like your electrical and plumbing systems. For the best value, Cinch offers its Complete Home Plan that starts at $39.99 per month. This plan adds everything covered in the Appliances Plan and Built-in Systems plan together, and it also includes a homeowners insurance deductible reimbursement. This means Cinch provides you up to $500 when you pay a deductible on a homeowners insurance claim. The benefit is offered once per year.
Cinch Home Services also offers optional coverage for the following items:
- Pool (heater included)
- Spa (heater included)
- Pool with spa (heater included)
- Septic tank/pumping
- Well pump
- Premium Upgrade Package: This covers the cost—up to $1,000 per claim—when there are charges that are not normally covered under a home protection plan, such as permits and code upgrades. It should be noted that cap limits apply
If you want to learn about other top home warranty companies, read our in-depth company reviews:
Our Rating Methodology
The This Old House Reviews Team backs up our home warranty ratings and recommendations with a detailed rating methodology to objectively score each provider. We conduct research by speaking with company representatives, requesting quotes, analyzing sample contracts from each company, and conducting focus groups and consumer surveys. We then score each provider against our review standards for coverage, value, trustworthiness and transparency, availability, and customer service to arrive at a final score out of 100.
To share feedback or ask a question about this article, send a note to our Reviews Team at reviews@thisoldhousereviews.com.