How Much does a Home Warranty Cost?

A home warranty can help reduce your out-of-pocket costs when your home appliances or systems break down. These warranties are often included by a seller in a home purchase as a way to attract buyers, but anyone can buy a home warranty for themselves.

Home warranty prices can range from less than $500 per year to around $1,200 per year. Your price will depend on your home’s characteristics, the coverage you choose, and the company you purchase your plan from. You can also pay more for add-on coverages, which can increase your costs by hundreds of dollars per year.

What Is a Home Warranty?

Home warranties are service contracts that protect systems and appliances within your home. They usually cover common kitchen and laundry appliances. They also usually cover home systems, including your electrical system, plumbing system, and HVAC system.

A home warranty pays to repair or replace the covered systems and appliances when they break down. These warranties may cover damage due to wear and tear or unexpected breakdowns or malfunctions.

If a covered system or appliance breaks down, you’ll file a claim with your warranty company. Each company may have a unique process, but generally, someone will come to look at the item to see whether it can be repaired or needs to be replaced altogether. You’ll pay a service fee outlined in your contract, while the warranty company will pay for the rest.

How Much Does a Home Warranty Cost?

The price of a home warranty generally ranges from less than $500 to roughly $1,200, according to The Balance research. The price you’ll be quoted depends on several factors. Here’s what can impact your home warranty cost:

• The company: One of the most important factors that will affect your warranty cost is the company you choose, since some companies charge higher rates than others.
• The plan: Generally, the more comprehensive your home warranty, the more it will cost.
• Monthly vs. annual payment: Some warranty companies offer a discount when you pay for your warranty annually rather than monthly.
• Service fees: Some companies allow you to choose your own service fee, and a lower fee will result in a higher monthly or annual cost.
• Add-ons: Many companies offer optional add-ons to enhance your policy. Each will add an additional cost to your policy.

What's Negotiable

Home warranties usually come as predetermined plans, and most companies offer a few different plans for you to choose from. And while you usually can’t negotiate the price or contents of those plans, many warranty companies offer add-ons that allow you to further customize your plan.

These add-ons allow you to enhance your warranty with coverage of systems or appliances that aren’t covered in the standard plans. Some of the coverages you can add to your home warranty include:

• Pool
• Spa
• Sump pump
• Well pump
• Septic system
• Central vacuum
• Roof leak
• Lighting fixtures
• Pest control
• Water softener
• Ice maker
• Generator 

Who Is a Home Warranty Right For?

A home warranty might be the right choice in a few key situations. One of the most common times someone purchases a home warranty is when buying a house. In fact, sellers often offer home warranties to buyers as a part of the sale contract.

Getting a home warranty when you’re buying a house can be a good idea because you don’t know the history of the home or its appliances. A home inspection may bring to light any major issues, but may not accurately predict whether any systems or appliances are likely to break down in the near future.

Another situation in which a home warranty might be the right choice is if you have many older systems and appliances that will need to be upgraded in the next several years and the manufacturers’ warranties have expired. If you expect your repair costs will be high, you can mitigate them with the help of a home warranty.

Finally, you might want a home warranty if you can’t afford to repair or replace your home’s systems and appliances yourself. Yes, a home warranty is often expensive. But the price tag is far lower than a new HVAC system, for example.

Alternatives to Home Warranties

The most common alternative to a home warranty—and what most people do—is self-insure. In other words, when a problem arises with one of your home’s systems or appliances, you pay for the cost yourself.

If you own a home, regardless of whether you have a home warranty in place, it’s important to have an emergency fund in place. There’s a general rule of thumb that says you should save at least 1% of your home’s value for repairs each year.

Another way to prepare for unexpected costs is to maintain documentation of your manufacturers' warranties. When you purchase new appliances or systems, the manufacturer should pay to repair or replace them for a short period.

Compare the Best Home Warranty Companies

Home Warranty vs. Home Insurance

Some people may assume their homeowners insurance will pay for damage to their home systems or appliances, but that’s rarely the case. A home warranty and home insurance are very different protections, meaning one isn’t an adequate alternative to the other.

A home warranty is an optional plan that pays to repair or replace the systems and appliances in your home if they break down due to wear and tear and other similar issues.

Home insurance, on the other hand, is required by mortgage lenders and protects your home and its belongings against certain perils, including fire and natural disasters. Homeowners insurance coverages include the structure of your home, your personal belongings, liability, and additional expenses coverage in case you’re forced to leave your home temporarily due to a covered incident.

If your refrigerator breaks down due to wear and tear, your home warranty will pay for it, but your homeowners insurance wouldn’t. On the other hand, if your refrigerator is damaged in a house fire, your homeowners insurance will pay for it.

Frequently Asked Questions