A practical guide to evaluating home warranty plans, comparing coverage, understanding exclusions, and deciding whether a warranty or a repair savings fund is the better choice.
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Coverage Comparison
Compare basic vs. premium plan coverage tiers
Basic plans ($350-$500/year) typically cover HVAC, plumbing, electrical, and water heaters. Premium plans ($500-$800/year) add kitchen appliances, washer/dryer, and garage door openers. The $150-$300 price difference between tiers often pays for itself with a single appliance repair.
List all systems and appliances covered in each tier
Note coverage caps (per item and annual maximum)
Check coverage caps for each system and appliance
Most plans cap individual payouts at $1,500-$3,000 per item and total annual payouts at $5,000-$15,000. An HVAC replacement costs $5,000-$12,000, so a $1,500 cap on HVAC means the warranty covers less than a third of the replacement cost. Read the cap schedule carefully.
Verify whether the plan covers repair, replacement, or both
Some plans only cover repair costs, not replacement. If your 18-year-old dishwasher breaks and can't be repaired, a repair-only plan pays nothing. Plans that include replacement typically replace with comparable (not identical) models, which may be a lower-end unit.
Compare at least 3 warranty providers side by side
Prices for similar coverage vary by 20-40% between providers. Get quotes from 3 providers and compare coverage lists, caps, service call fees, and customer review scores. A provider rated 3.5+ stars across 500+ reviews is a reasonable baseline for reliability.
Exclusions and Limitations
Read the full list of exclusions in the contract
Common exclusions include pre-existing conditions, improper installation, code violations, cosmetic damage, and outdoor systems (sprinklers, pools, septic tanks). The exclusion list is typically 2-3 pages long and contains the most important information in the entire contract.
Check whether pre-existing conditions are excluded
Look for 'maintenance history' requirements that could void coverage
Check whether the plan requires proof of regular maintenance
Many plans deny claims if you cannot prove annual HVAC servicing, water heater flushing, or appliance maintenance. An HVAC tune-up costs $80-$150/year. If you skip maintenance and file a $5,000 claim, the warranty company can deny it based on the maintenance clause.
Identify items NOT covered that you might assume are included
Common surprises: most plans exclude refrigerator ice makers ($300-$600 to repair), ductwork ($1,000-$5,000), well pumps ($800-$2,500), and plumbing fixtures (just the plumbing lines). If any of these are a concern, check whether add-on coverage is available.
Review the age and condition requirements for covered items
Some plans won't cover systems older than a specified age or those not in 'working order' at the time the plan starts. If you bought the plan at closing on an older home, the warranty company may inspect before approving claims. Get the age cutoff and condition requirements in writing.
Service Call Fees and Claim Process
Confirm the service call fee per visit
Service call fees (also called trade fees or deductibles) range from $75-$125 per visit. You pay this fee every time a technician comes to your home, regardless of whether the repair is covered. On a $75/visit plan, 3 service calls per year cost $225 on top of your annual premium.
Understand the claim filing and approval timeline
Most providers require 24-48 hours to assign a technician after you file a claim. The technician then diagnoses the issue and submits it for approval, which takes another 24-72 hours. Total time from claim to repair is typically 3-7 business days — longer for parts that need ordering.
Check whether you can choose your own repair technician
Most warranty companies assign their own network technicians, and you cannot choose who shows up. If you want to use your own trusted contractor, some plans offer reimbursement options at 60-80% of the cost. Using an out-of-network technician without pre-approval typically voids the claim.
Read reviews specifically about the claim denial rate
The most telling reviews discuss claim denials and payout disputes, not the sales process. Search for '[provider name] claim denied' to find real experiences. Providers with consistent complaints about denied claims for pre-existing conditions or maintenance requirements are ones to avoid.
Cancellation and Renewal Terms
Review the cancellation policy and any fees
Most plans allow cancellation within 30 days for a full refund. After 30 days, cancellation refunds are prorated minus an administrative fee of $25-$75 and the cost of any claims already paid. If you've already received a $1,500 HVAC repair, canceling will net you nothing back.
Check whether the plan auto-renews and at what price
Most home warranty plans auto-renew annually with a price increase of 5-15%. If you don't cancel before the renewal window (typically 30 days before expiration), you're locked in for another year. Set a calendar reminder 45 days before expiration to evaluate whether to renew.
Compare the renewal price against a new-customer quote
Renewal pricing is often 10-20% higher than new-customer promotional rates from the same or competing providers. Get fresh quotes from 2-3 providers before renewing. Switching providers annually can save $100-$200/year if you're willing to do 30 minutes of comparison shopping.
Alternatives to a Home Warranty
Calculate the cost of self-insuring with a dedicated repair fund
A home warranty costs $500-$800/year plus $75-$125 per service call. Setting aside $100/month ($1,200/year) into a dedicated home repair savings account builds a fund that you control, with no exclusions, no claim denials, and no service call fees. After 3 years, you have $3,600+ available.
Open a separate savings account labeled 'home repairs'
Set up automatic monthly transfers of $75-$150
Check manufacturer warranties still active on appliances
New appliances carry manufacturer warranties of 1-5 years that cover the same repairs a home warranty would. An HVAC compressor warranty is typically 5-10 years. If your appliances are under 5 years old, you may already have coverage that makes a home warranty redundant.
Evaluate whether extended warranties from retailers are a better fit
For specific high-cost appliances (refrigerator, HVAC), a single-item extended warranty from the retailer or manufacturer may cost $100-$300 for 3-5 years of coverage with fewer exclusions than a home warranty. This targeted approach often costs less than a blanket home warranty plan.
Decision Framework
Assess the age of your home's major systems and appliances
Home warranties provide the most value when multiple systems are aging simultaneously. If your HVAC is 12+ years old (typical lifespan: 15-20 years), water heater is 8+ years old (lifespan: 10-15 years), and appliances are 10+ years old, the probability of a major failure is high.
List each major system with its age and expected lifespan
Flag any systems past 75% of their expected lifespan
Compare annual warranty cost vs. likely repair costs
Add up your annual premium ($500-$800) plus estimated service calls ($75-$125 each, assume 2-3/year). If the total exceeds $800-$1,100/year, a self-funded repair account may be the better financial choice unless you have multiple aging systems likely to fail within the next 12-24 months.
Factor in your comfort level with managing repairs yourself
Home warranties handle the logistics of finding and scheduling technicians, which has real value if you lack handyman contacts or are uncomfortable evaluating repair quotes. If you already have a trusted HVAC tech, plumber, and electrician, you lose that flexibility with most warranty plans.
Frequently Asked Questions
How much does a home warranty cost per year?
Annual home warranty plans range from $350-$600 for basic coverage (appliances and major systems) to $500-$800 for comprehensive plans that add roof leak repair, pool equipment, and septic systems. Each service call carries a deductible (called a "service fee" or "trade call fee") of $75-$125 per visit. When comparing plans, factor in the service fee multiplied by expected claims — if you anticipate 3-4 calls per year, a plan with a $125 service fee costs $375-$500 in deductibles alone.
Is a home warranty worth it for a new construction home?
New construction homes typically come with a builder's warranty covering structural defects (10 years), systems (2 years), and workmanship (1 year), making a home warranty redundant for the first 1-2 years. Appliances include their own manufacturer warranties (1-5 years depending on brand and item), which provide better coverage and faster service than a home warranty company. A home warranty becomes more valuable starting in year 3-5 when builder and manufacturer warranties expire and systems reach the age where breakdowns begin.
What do home warranties not cover?
Home warranties exclude pre-existing conditions (issues present before the contract start date), improper installation, code violations, cosmetic defects, and damage from lack of maintenance. If your HVAC system fails and the technician finds the air filter hasn't been changed in two years, the warranty company may deny the claim for maintenance neglect. Outdoor items (sprinkler systems, exterior faucets, fencing), secondary refrigerators, and wine coolers typically require add-on coverage at $50-$100 each.
How long does it take to get a repair through a home warranty?
After filing a claim, the warranty company assigns a contractor within 24-48 hours, with the actual repair visit occurring 3-7 business days later in most cases. Emergency situations (no heat in winter, sewage backup, no running water) have a 24-hour expedited response requirement in most contracts. The most common complaint from warranty holders is slow service — if the assigned contractor cannot arrive within 5-7 days, most contracts allow you to request a different contractor or hire your own and submit for reimbursement (get pre-approval first).