A home warranty is a residential service contract that helps pay to repair or replace household systems and appliances when they fail from normal wear and tear. Plans are typically offered as systems-only, appliances-only, or combo tiers, with optional add-ons. It’s not homeowners insurance and doesn’t cover structural damage or consequential losses—consumer regulators like the NAIC and FTC emphasize reading the contract for caps, exclusions, service fees, and cancellation terms before buying.
If you’re wondering “Do I need a home warranty?”—the answer is that it’s optional. You don’t need one to close on a mortgage. Home warranties work alongside homeowners insurance: the warranty handles covered breakdowns of listed systems/appliances, while insurance covers perils like fire or wind and damage to structures/contents. Typical pricing in 2025 runs about $40–$75 per month (roughly $500–$900 per year for standard plans), and add-ons can push totals above $1,000; these benchmarks are consistent with consumer pricing research from Bankrate and NerdWallet.
How does a home warranty work? You pay a home warranty company a premium and, when a covered item fails, you submit a claim and the provider dispatches a contractor. You pay a per-visit service call fee—now most commonly $75–$125, with many providers offering $150 options; a few plans still advertise lows near ~$60 (see current fee tiers from American Home Shield, Cinch, First American, and 2-10 Home Buyers Warranty). Many brands now support 24/7 digital claim intake, scheduling, and status tracking; some also use remote video diagnostics and AI-enabled triage to pre-diagnose issues and match the right technician (see Frontdoor and its Streem platform, and HomeServe My Account).
What Is Covered by a Home Warranty?
The exact items that your home warranty covers depend on the plan and state contract. Generally, essential home systems (HVAC, plumbing, electrical) and major appliances are included on combo tiers, with optional add-ons like limited roof leak repair, consumer electronics protection, EV charger coverage, and even certain solar components increasingly available in 2025 (availability and caps vary by provider and state; see AHS plan outlines, Cinch Electronics Protection, and Liberty Home Guard).
Replacement and limits matter. Providers typically repair first and replace only when more economical. Contracts set dollar caps per item/category and sometimes aggregate caps for a term; workmanship guarantees commonly range from about 30 days up to 180 days depending on brand (e.g., Cinch advertises 180 days; AFC Home Club lets you use your own licensed contractor with pre-approval and extends workmanship coverage for the membership term). Many plans now advertise limited coverage for “unknown pre‑existing conditions” on select tiers, but eligibility is narrowly defined in ZIP‑specific contracts (see AHS and First American details).
What Is Not Covered by a Home Warranty?
Home warranties are service contracts, not homeowners insurance. They generally exclude structural elements (floors, walls, roof replacement), cosmetic issues, and consequential damage from a failure. For example, if a washer leaks and damages flooring, the contract may cover the washer repair or replacement up to plan limits, but the floor replacement is an insurance issue—guidance echoed by the NAIC and FTC. Marketplace frustrations often stem from mismatched expectations about exclusions, caps, or claim process; across U.S. complaint channels, consumers reported over $10 billion in fraud losses in 2024 to the FTC, and the CFPB handled well over 1.5 million complaints, while the Better Business Bureau highlights persistent disputes over refunds, workmanship, and cancellations. For home warranties, the most common pain points are denials tied to exclusions, delays due to contractor availability, and hitting dollar caps—review your contract to set realistic expectations.
Your warranty may not cover every appliance or scenario. Most plans impose a waiting period before claims are eligible (often about 30 days), exclude known pre‑existing conditions, and deny issues linked to improper installation, lack of maintenance, code violations, or inaccessible components. Some brands sell upgrades that buy back limited coverage for specific situations (e.g., limited roof leak repair or certain code-related items), but scope and dollar limits vary by state contract—always rely on the ZIP‑specific sample contract from the provider (see NAIC, FTC, and provider plan pages such as First American and AHS).
When It Makes Sense to Purchase a Home Warranty?
If your home’s systems and appliances are older or out of manufacturer warranty, a home warranty can help stabilize repair costs—especially for high‑ticket exposures like HVAC, plumbing, and major refrigerators. It won’t replace homeowners insurance, but it can simplify finding a technician and managing repairs via a single point of contact. Note that most plans include a waiting period and network rules; some providers allow you to use your own licensed contractor with prior approval.
Below we break down a few instances where getting a home warranty makes sense.
- You aren’t handy. If you prefer a managed repair experience—digital claim intake, technician dispatch, and status updates—modern providers increasingly offer mobile apps and remote diagnostics that reduce effort and speed fixes (see Frontdoor and Streem).
- You’re on a tight budget. Premiums commonly run about $40–$75 per month for standard tiers, but you’ll still pay a per‑visit service call fee (typically $75–$125; options up to $150) when a contractor is dispatched—confirm both costs in your quote (Bankrate; NerdWallet).
- You own older appliances and systems. As equipment ages, the probability of failure rises. Reviewing per‑item caps and exclusions for HVAC, water heaters, and refrigerators is key; higher caps often matter more than a small price difference (see plan disclosures at AHS and First American).
- Your house is more than 10 years old. Older homes can benefit from coverage of wear‑and‑tear failures across multiple trades. If everything is brand new and under manufacturer warranty, coverage may be redundant.
How to Shop for a Home Warranty?
If you decide to get a home warranty, compare at least three providers at the same service‑fee tier and request the ZIP‑specific sample contract for each. Review: per‑item and any aggregate caps, exclusions (pre‑existing conditions, improper installation, code violations), workmanship guarantee length (often 30–180 days), contractor policy (network‑only vs choose‑your‑own with pre‑approval), and service‑fee rules (multiple trades, recall windows). Typical 2025 pricing is ~$40–$75/month ($500–$900/year) with service call fees typically $75–$125 and options up to $150, per Bankrate, NerdWallet, and current provider menus (AHS; Cinch; First American; 2-10). Contracts increasingly spell out per‑item caps in the low‑to‑mid four figures for appliances and higher limits for HVAC; verify exact amounts in your state contract (see First American and AHS).
Look for a warranty that allows you to customize exactly what you need and that offers a modern claims experience (online portal/app, technician ETA notifications, and remote/AR diagnostics). Also check renewal and cancellation terms. The FTC’s Negative Option Rule requires clear disclosures, express consent, and simple “click‑to‑cancel” for auto‑renewing plans; states like California and New York require all‑in price display of mandatory fees (CA DOJ; NY DOS). Prices and fees often rise at renewal due to elevated repair costs and wage inflation in the trades—major providers have cited inflation-driven claims severity and service‑fee adjustments in filings (Frontdoor SEC filings; see broader inflation context from BLS Employment Cost Index and CPI). Check rate‑increase and auto‑renewal clauses before you enroll.
