The Best Home Warranty
- November 21, 2017 - We’ve updated this review to provide additional resources for understanding your home warranty contract, since "confusing fine print" ranks high on the list of consumer complaints about the home warranty industry. We've also made some light changes to clarify our methodology. We remain confident that American Home Shield is the best provider — so long as you read your contract carefully.
There’s peace of mind knowing that if your refrigerator is on the fritz, you won’t be unexpectedly set back hundreds of dollars for repairs. But we’ll be the first to admit that home warranties can be a risky investment. The industry as a whole has a terrible reputation, and groups from Consumer Reports to Angie’s List have reported on a slew of customer complaints — everything from service delays to band-aid repairs to denied claims.
We set out to find a provider that would come through on its promises. Of the 17 home warranty providers we analyzed, American Home Shield is our top pick. Its customizable plan means you pay to cover only what you choose, and it couples generous limits with friendly, informed customer service.
Our runners-up — Total Protect, Sears, and First American — each have similarly generous coverage limits and knowledgeable reps, but the plans aren’t quite as flexible or affordable as American Home Shield.
How We Found the Best Home Warranty
A home warranty is a type of service agreement that covers the cost to repair or replace items in your home if they break down. It doesn’t cover accidents or natural disasters (that’s homeowners insurance) but the pricing model works in a similar way. You pay a monthly fee or a lump sum for your plan, like a premium. When you request a repair, you pay a one-time service fee (like a deductible) that covers parts and labor.
Home warranties are intended to cover the costs of unexpected home repairs, but google “home warranty complaints” and you’ll find thousands of disgruntled customers. The crux of it: Many buyers don’t fully understand the limitations of their contracts.
“Home warranties are one of the most consistently complained about categories of service on Angie’s List, but largely because of misunderstandings by the owners. They assume it covers all their major appliances, and when one breaks, they call the company expecting a full replacement or repair just because they have a warranty.”
The first burden of shopping for a home warranty is understanding what this insurance type actually covers. The second? Finding the provider that does it best.
We started with 17 home warranty companies that offered plans in at least 40 states (this excluded smaller, regional companies like Fidelity National or Old Home Republic). All of our top picks have at least a B rating from the Better Business Bureau or Angie’s List, but we didn’t pick providers based on ratings alone. We put their services to the test.
We cut any providers that were difficult to work with.
Since so many home warranty complaints stem from misconceptions about what a policy will cover, we looked for providers that went out of their way to be upfront and transparent about their product. We called each company multiple times with questions about coverage and the claims process to see how we'd be treated as policyholders. We also dug into service agreements — the section of the contract that details what the company will fix and the maximum amount it’ll pay out.
We hoped to find friendly, educated reps that were upfront about coverage areas and service providers. But we didn’t always get that. In fact, HMS Home Warranty sales reps gave us a quote in an area we knew it didn’t service. When confronted about it, we were told that they actually don’t check if they cover your address until after you’ve signed up. Why purchase a policy you might have to immediately cancel? Any provider that consistently kept us on hold was out, too. In one instance, America’s Preferred Home Warranty put us on hold for over 18 minutes and eventually dropped the call.
We also passed on a few companies whose sales reps ignored our questions and launched right into a sales pitch. Choice Home Warranty was a repeat offender. When we told one of the reps “No thank you, I’m still shopping around,” he hung up without so much as a goodbye.
All of our remaining picks needed to share their sample contracts online. Tim Meenan, executive director and general counsel for the Service Contract Industry Council (SCIC), told us the SCIC recommends that all home warranty companies make it easy to find and review its contract. You shouldn’t have to call a company, survive a sales pitch, and surrender your email just to see the company’s coverage details.
Contenders cut: 7
2-10 Homebuyers Warranty, American Home Guard, America’s Preferred Home Warranty, Choice Home Warranty, HMS Home Warranty, Secure Home Warranty, Select Home Warranty
Then we considered coverage.
We compared the coverage of the remaining 10 providers, and what stood out to us most was the maximum amount each warranty provider will pay, either for single repairs or for a year’s worth of maintenance. Some caps are generously high: American Home Shield will pay up to $1,500 per item and TotalProtect doesn’t limit their coverage at all. But half the companies on our list cap their coverage at $500. Is that enough? Probably not.
Imagine your refrigerator breaks down. Since the average refrigerator repair costs between $200 and $400,* getting that lone problem fixed could use up the majority of your yearly limit. If it needs to be replaced altogether, you risk paying for most of it out of pocket.
A 2016 survey of American consumers reports that the majority of households experience appliance failures every year. Michael Grimshaw, a repair technician from Milwaukee, told us that in his experience, not only do most appliances start falling apart in under a decade, they’ve been designed to. “A manufacturer’s target is to have the homeowners replace their machines every 8-12 years, with one repair during that time. Knowing what will fail and when is an integral part of the manufacturer's business model,” he told us.
Most appliances start falling apart in under a decade.
|Appliance/System||Life Expectancy||Average Replacement Cost*|
*Replacement cost is for a mid-range device. Source: InterNACHI
With all this in mind, we dropped any providers that capped big-ticket items at $500 in favor of those who could see us through an expensive repair or a new replacement.
Contenders cut: 6
365 Home Warranty, American Residential Home Warranty, America’s 1st Choice Home Club, Home Warranty of America, The Home Service Club, Total Home Protection
We didn't factor in the price of a policy.
Policy costs vary greatly from state to state. In some cases, we saw the same plan vary by more than $100 just a few states away. But the numbers aren’t set in stone. Several of the experts we spoke with indicated that pricing is flexible, although we didn’t really understand what that meant until we tested it ourselves.
During one of our calls we were quoted $570 per year. We told the representative that our budget was $450. He responded, “Okay, let me work on this,” and thirty seconds later returned to inform us that they were running a special promotion that brought our bill down to (you guessed it) $450. That’s not to say that a little haggling will always score you a $120 price drop, but it may be well worth your time to try negotiating a deal.
Don't be afraid to ask for a lower price. All service contract prices are negotiable — that’s why we recommend getting a quote over the phone. Online, there’s no way to pitch for a more competitive rate.
We read through each contract to identify common pitfalls.
It’s important to read the fine print before you sign — which means you have to know how to read it. Evan W. Walker, Esq. of the Law Office of Evan Walker warned us,“The contract is not written to be understood by the consumer.” But it’s the small, contractual specifics that determine what happens when something breaks. Will the provider cover repairs for old problems? Will it accept responsibility for technicians that do shoddy work? After reading through multiple sample contracts, we found a few common clauses to be aware of before you sign:
"Routine maintenance" helps ensure your claims are honored.
Under most warranties, you have to perform routine maintenance in order to keep units eligible for repairs and replacements. This includes preventative measures like flushing scale build-up out of a tankless water heater, plus normal, cyclical cleaning, like a once-annual AC system cleaning. Your machine’s instruction manual usually explains its maintenance needs.
Anything outside of “normal wear and tear” probably isn’t covered.
Essentially, you might not be reimbursed for freak accidents. Every company has its own definitions, but the gist is that if an external force breaks your appliance (whether it’s a tornado or an errant roller skate) the repair is not their responsibility.
And anything that isn’t explicitly covered in the contract probably isn't covered.
Some contracts, like Sears', list all items that are covered and those that aren’t. Others, like First American, says it covers “all parts and components,” then follow it with a list of exclusions. Either way, if you don’t see a specific scenario, part, or issue explicitly outlined, it is most likely not covered.
If we had to distill the entire subject down to one point, it would be this: A home warranty contract works to minimize the provider's liability. Like all insurance companies, home warranty providers only make money if they pay out less than they take in. Expect them to be extremely specific about the line they draw on coverage. Our top picks are free of major red flags (and we look at some of their contract specifics below), but we'd also encourage you to check out the additional tips in our contract reading cheat sheet.
The Best Home Warranty Providers
American Home Shield (AHS) invented the concept of home warranties 46 years ago, so it’s no shock that today it offers the most complete nationwide coverage of any provider. It also has the most transparent terms and conditions we found, and our experience with customer service was overwhelmingly pleasant — not a descriptor we’re used to using for service calls.
AHS has four plans to choose from, but we really loved its Build Your Own option — the only one like it on the market. It works like this: You pick the 10 items (appliances or systems) that you want covered. If you don’t own a dishwasher, don’t pick it. If you just bought a brand-new hot water heater, slot another device in its place and maximize the value of your contract. DIYers benefit too: you have the flexibility to cover only the devices you wouldn’t attempt to fix yourself.
The plan also starts at $32 per month, making it by far the most cost-effective way to cover the systems and appliances you care about the most — and nothing you don’t.
Not sure which items to pick?
Your home warranty should cover the items that are most expensive to replace. For appliances, that includes refrigerators, dishwashers, oven/range/cooktops, and washer/dryers. For home systems, that’s air conditioning, heating, plumbing, electrical, and water heaters.
Grimshaw told us that he keeps a particularly sharp eye on bottom-freezers, french-door refrigerators, dryers, and ovens. Mechanically complex appliances often need repair first and tend to be the most difficult and expensive to fix.
If you’re looking for a plan that covers more than 10 items, AHS has options for you, too. The Combo plan includes all covered systems and appliances, including built-in microwaves, garbage disposals, ceiling fans, smoke detectors, and more, starting at $38 per month.
No matter which plan you choose, pools, spas, and well pumps will cost an additional $7–13. Your monthly premium will also vary depending on the service fee amount you choose: $75, $100, or $125. The cheaper your service fee, the higher your monthly premium.
Limits make or break a home warranty. If a company will only pay $500 to fix or replace an appliance, it doesn’t matter how comprehensive the coverage details are. We liked that AHS will pay up to $3,000 per item for most of its appliances and systems. Compare that to 365 Home Warranty which is only liable for $3,000 during the entire life of the contract (and even that’s better than some).
The only exception to American Home Shield’s best-in-class coverage: it caps plumbing repair expenses at at $1,000. While that’s lower than what our other top picks offer (Sears and TotalProtect don’t put a cap on plumbing at all), it will most likely be enough to cover the most common repairs or replacements. A broken sump pump is generally the most expensive plumbing issue you might run into, and replacing it costs around $500.
During our first call with AHS, we were impressed with how well the representative knew the ins and outs of her product. We poked and prodded with some finely tuned questions about the contract, but she remained composed and echoed exactly what we already knew to be true from reading the contract ourselves. For example, when asked what the maximum liability was for an HVAC was, the first rep explained that AHS has no cap for HVACs unless it contains a boiler-type furnace — exactly what’s listed in the contract. The second representative we spoke with didn’t have as many answers right off the bat, but didn’t hesitate to transfer us to someone in the claims department who did.
We didn’t get this level of treatment anywhere else. With other providers, we often felt as if we were being assuaged with false assurances: No matter what we asked our American Home Guard rep, the answer was either “Yes” or “Don’t worry about it.” AHS was completely transparent about what would or wouldn’t be covered in its agreement.
Like all of our top picks, AHS has a few online benefits that make owning a home warranty much simpler. Customers can submit and track claims on the site, as well as pay their bills. No paper mail. No phone trees. Just a few clicks.
Other Home Warranties to Consider
American Home Shield is the best option we found, but if you happen to live in an area of your state that has very few AHS-approved service technicians — or doesn’t have AHS coverage period — there are a few others you should consider. All three met the same high standards to which we held American Home Shield, but weren’t quite as flexible or affordable.
TotalProtect was a close competitor, but it doesn’t offer a custom option like American Home Shield. Where TotalProtect stands out is its 180-day “workmanship guarantee” — that’s twice as long as AHS. If you experience problems with a repair or installation up to six months after the fact, TotalProtect will waive the service fee. Faulty replacement parts and incorrect repairs aren’t always immediately apparent, so we liked that TotalProtect went the extra mile. (Sears also has a lengthy workmanship guarantee.) It also doesn’t have liability caps on any major appliances or systems. In fact, there’s no maximum aggregate liability for the contract term at all.
We recommend the Combo plan because it’s the most comprehensive. It includes the most expensive, break-prone systems and appliances, plus other, uncommon or inexpensive items like central vacuum systems, doorbells and chimes, garage door openers, smoke detectors. At $44 per month, it’s about $5 more expensive than AHS’s Combo plan. But in terms of coverage, it’s right on par, plus whirlpool tub coverage, which AHS doesn’t offer. Appliance and system plans are also available, starting at $23 and $35 per month, respectively. Like American Home Shield, you can choose your service fee ($75, $100, or $125).
There’s no live chat option on the site, so plan to call TotalProtect directly if you have any questions. Otherwise, TotalProtect is a strong, slightly more expensive alternative to our top pick, American Home Shield.
Just like TotalProtect, Sears Home Warranty impressed us with a 180-day recall period. We also liked that customers get a free heating and cooling maintenance check every year, and select East-coast customers (plus a few in California and Michigan) get the added perk of discounted oil changes and tire rotations at Sears Auto Centers. There’s a $1,000 limit for liability on your pool (and ultra-premium appliances — think high capacity or “professional series”), but everything else is covered by a generous $10,000 cap. Another perk: The site has a live chat option, which makes it easy to get your questions answered without the hassle of waiting on the phone.
Now for the not-so-good. Sears is one of the most expensive providers out there. Plan for plan, it’s consistently around $10 more per month than American Home Shield. Its Whole House Warranty is a full $20 more per month for the same items, plus water softeners. Sears offers two service fee options: $75 or $100.
What’s more, the future of the business is unclear. In early 2017, Business Insider reported that Sears Holdings (the parent company that oversees its home service agreements and retail stores) could be nearing bankruptcy, in which case there’s no guarantee it would be able to satisfy ongoing home warranties. In response, the CFO, Jason Hollar, stated in a blog post that Sears is “a viable business that can meet its financial and other obligations for the foreseeable future.” If that changes, its customers can always cancel their agreements.
First American Home Warranty gets a blue ribbon for having the most organized contract of all our top picks. It still looks like a legal document, but it clearly lays out the what each plan does and doesn’t cover.
Its $25-per-month Basic plan is comparable to the appliance-centric plans found in our other recommendations. And it’s only $300 for the year if you pay upfront, which is a pretty great deal paired with its flat $75 service fee. (Choosing a $75 service fee elsewhere would bump your plan up by about $100/year.) All your regular kitchen appliances are included, plus a few extras (water heater, electrical, ductwork, and a well pump). If you are primarily looking to cover your kitchen, that’s a competitive price.
If you’re looking for a more comprehensive plan, know this: You’ll have to upgrade to its “Premiere” plan ($41 per month) to cover your furnace, and AC coverage is only available as a $9-per-month add-on. That makes First American about $10 more than American Home Shield per month, and it comes at the expense of less flexibility. Another drawback: First American has a 30-day recall period, which is the shortest of all our top picks.
There are eight states, including New York and Illinois, that First American Home Warranty does not service. The other six are a mystery. None of the representatives we spoke with knew what they were (they can only check coverage for the property address you give) and there’s no information in the contract or on the site — which, to us, is a significant oversight. If you’re interested in purchasing a home warranty, get a quote for your address before you spend any time reviewing a provider’s plans.
Who Should Get a Home Warranty?
Homebuyers and sellers benefit the most.
According to a 2014 industry study, homes with warranties spend approximately 11 fewer days on the market and sell for an average $2,300 more — around $1,800 more than what the seller probably spent on the home warranty. Sellers benefit from the extra incentive, and buyers get the peace of mind that they won’t have to pay for repair after repair out of pocket.
That said, before you purchase a home warranty, ask the seller or your real estate agent if they have any documentation on manufacturer warranties — the manuals should indicate if they are still in effect. The manufacturer’s customer support channels should also be able to help. If all of the major appliances are already covered by the manufacturer’s warranty, there’s no need to duplicate that coverage with a home warranty.
And if you’re moving into a brand-new home, be sure to ask your real estate agent about the possibility of a builder's warranty. Some new homes also come standard with 6- to 12-month warranties on systems and appliances courtesy of the contractor.
Longtime owners can save, too.
Based on user-submitted data, Home Advisor found that the median repair cost for common home appliances like fridges, ovens, and washers is around $200, and the most expensive repairs tend to max out around $350. Repairs for heating units, air conditioning units, and other big-ticket systems average between $160 and $500 with a max of about $1,000. When an appliance needs multiple repairs or has to be replaced altogether, you might be on the hook for double or triple that price.
If multiple appliances or systems are nearing the end of their average lifespan, a home warranty can save you a lot of money and grief. The trio of a busted AC compressor, a leaky fridge, and a snapped dryer belt — three fairly common issues for aging appliances and systems — can easily exceed the cost of a home warranty and service fees.
Just remember that it’s up to the provider to say whether an appliance has been adequately maintained, or if its current worth offsets the repair costs (old appliances are repaired and replaced with their pro-rated value in mind). A ten-year-old oven isn’t worth much, and could be deemed past its “useful life” according to some providers.
How to Read Your Home Warranty Contract
There are two things you should keep in mind about your contract: It is written by lawyers, and it is the only hard source of information about your provider’s obligations. Brochures and sales reps make cheerful promises, but the contract gives specifics. Understanding how these documents work is the best way to ensure you don’t run into surprises.
Terms & Conditions
The opening paragraphs lay out the items that the provider is responsible for. This can include both systems and appliances. Appliances are self-contained units like a washer, fridge, or microwave, while systems are a bit more intricate or costly — think an HVAC system, hot water heater, or the electrical wiring throughout your home.
To be covered, systems and appliances generally need to be properly installed, currently working, and located inside your house or garage.
Most companies then list exclusions — the things they won’t cover. These will vary depending on your contract, but below are a few we ran into repeatedly:
- Items with pre-existing defects or improper installation. If the flaw existed before your contract began, most providers won’t cover it. Even if you didn’t know about the issue, it can still be excluded, since clues like water stains can tip service techs off to problems years in the making. One of the reasons we liked American Home Shield so much is that it does cover pre-existing problems so long as the issues aren’t easily detectable via a visual inspection (does the unit look healthy?) and a simple mechanical test (does anything strange happen if you turn it on and off?).
- Repairs needed due to secondary damage. Some providers state that they aren’t responsible when an uncovered appliance damages a covered appliance (or vice versa). If a plumbing problem causes your washing machine to go haywire and only one of those items is on the warranty, this clause could leave you responsible for part of the bill.
- Units that are covered by another warranty or insurance. A home warranty is always considered “secondary coverage.” If your refrigerator is still under its five-year manufacturer warranty, your provider will expect you to go to the manufacturer for repairs.
- Repairs that you arranged on your own. If you dial up a local plumber for a sudden leak rather than submitting a claim through the warranty company, expect to pay for it out of pocket.
- Units that are under recall or have factory defects. Manufacturers are responsible for replacing or repairing these faulty items.
- Necessary upgrades demanded by law. This stipulation means your provider isn’t responsible for, say, asbestos removal, or for updating your refrigerator to a model that doesn’t use Freon (which is being phased out by 2020).
- Commercial grade equipment. Some providers won’t cover high-capacity “professional series” equipment, like a 100-gallon tank water heater, since these appliances often come with generous manufacturer warranties.
- Repairs or replacements requested before your contract officially starts. A 30-day initial wait period is typical.
- Repairs or replacements requested while your account is in the red. If you’ve fallen behind on payments, the provider is not obligated to service your claim.
Often, the warranty provider will go into additional detail about the exact amount of coverage they'll provide for each appliance listed on the contract.
The mechanical components of a unit — the parts necessary for function, like a drain pump in your clothes washer or the pilot burner in your water heater — are typically covered. But the inert plastic bits, like knobs and covers, usually aren’t. If all that’s wrong with your appliance is a cracked knob or dial, this repair is usually deemed “cosmetic.” Don’t waste time and money calling your provider. Hit up Home Depot or call an independent handyman to replace these parts.
The contract also stakes out how much assistance you get once you request help. For example, if an issue requires tearing into the drywall, many companies return it to a rough finish: They’ll replace the drywall but expect you to replace the floral wallpaper. Other companies will cover as much restoration as the monetary cap on the repair allows. (We only looked at companies with caps of at least $500 per item.)
The contract should specify what steps you need to take to make a claim. Usually, you'll be instructed to call a 24/7 customer service hotline, but keep an eye out for contracts that state the company is closed on holidays (a problem we ran into with America’s First Choice). After you call the hotline, many contracts stipulate a 48-hour wait period as they get in touch with a service technician, who will then reach out to you to set up an appointment. But again, pay attention to the specifics: Weekends and holidays can combine to kick you up to 4 days of waiting with companies like First Choice.
You’ll pay a service / diagnostic fee for your repair visit, a flat rate ranging from $50-$125 (most of our top picks let you choose your service fee, which will affect your monthly premium slightly). If you want the service provider to visit outside of normal business hours, you may be charged extra. If the repair requires more than one appointment, you’ll typically just be charged once.
Most contracts promise that an emergency situation gets a quicker timeline, but each provider defines service emergency differently. According to Home Warranty of America, an emergency means someone’s life is in peril. TotalProtect is a little more generous. They’ll take the “habitability of the building” into consideration.
“Carefully read any portions of the contract which discuss how quickly after you request a repair it will be completed. Read what happens if the repair does not work, or if the vendor who comes to make the repair cannot get the job done. Coverage is not usually an issue under these contracts, but how repairs get done — and when — vary from company to company.”
Because not all problems are an easy fix, make sure a recall period or workmanship guarantee is present within your contract. If you discover your unit is still not working properly within this timeframe, the service provider will schedule a second appointment at no charge. TotalProtect and Sears come with impressive 180-day recall periods, and American Home Shield offers a respectable 60 days. But many home warranty providers don’t offer them at all.
Home warranty companies also decide whether to repair or replace your unit, or whether it’s “beyond economic repair”. If you qualify for a replacement, the company will either choose a base model for you (the standard unit, zero enhancements, and the color of their choice), or give you the cash to purchase on your own. Fair warning: If the old unit needs to be carted away, you’re usually responsible for disposing of it.
Term and Costs
You should have 30 days after first signing up to cancel your contract without penalty. After that, you’re liable for a one-time termination fee. First American charges a $50 cancellation fee, for instance, while American Home Shield charges the same amount as your monthly payment.
Most contracts are good for one year, but companies like Home Warranty of America, TotalProtect, and Sears automatically renew your contract at the end of 12 months. We’d recommend always reading through the renewal information to make sure pricing hasn’t increased and that none of the terms or conditions has changed.