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Home warranties are state‑regulated service contracts that help pay to repair or replace covered home systems and appliances when they fail from normal wear and tear. They are not homeowners insurance and won’t cover perils like fire or theft; home insurance generally covers the dwelling and sudden perils, while a home warranty focuses on breakdowns of systems/appliances. In California, these contracts are regulated as “home protection” contracts (California Department of Insurance). You typically pay a monthly or annual premium plus a per‑visit service call fee; in 2025, common prices are about $45–$75 per month ($540–$900 per year) with service fees around $75–$150 per claim (U.S. News 360 Reviews; Forbes Home; Consumer Reports; Bankrate; see also NAIC guide).
How does a home warranty policy work?
When a covered item fails, you submit a claim online, by app, or by phone. Many providers now use digital status tracking and video or AR triage to diagnose issues before dispatch, which can reduce wait times and unnecessary visits (see Frontdoor’s consumer app). A technician from the provider’s network is scheduled, and a per‑visit service fee (often about $75–$150) applies; some plans offer tiered fees that trade a higher fee for a lower premium (U.S. News 360 Reviews; Bankrate).
Payment decisions follow your contract’s terms: providers pay to repair or replace up to stated limits if the cause is covered and within caps. Contracts commonly include per‑item and per‑term dollar limits and may limit or exclude consequential damages; such limits must be clear and conspicuous and are governed by U.S. warranty law and the Uniform Commercial Code (FTC consumer advice; FTC warranty law guide; UCC §2‑719). If costs exceed a cap, you pay the difference.
Instead of relying on a one‑off example, review the specific caps that apply to your appliances and systems and note any exclusions (e.g., pre‑existing conditions, improper installation, or maintenance requirements). If a limited “repair or replace” remedy fails its essential purpose, broader UCC remedies may apply; read these sections carefully before purchase (UCC §2‑719; FTC advice).
Home Warranty Costs
In 2025, most standard plans cost about $45–$75 per month ($540–$900 per year) before add‑ons, with broader industry ranges roughly $400–$1,000 annually. Service call fees commonly run $75–$150 per claim. Add‑ons (e.g., pool/spa, well or septic pump, second refrigerator) are usually priced a la carte, often ~$2–$20 per month per item, with larger systems at the higher end. A practical annual budget for mid‑tier coverage is ~$800–$1,200 when combining premiums with two to three service calls. Prices vary by ZIP code, plan tier, and chosen service‑fee option; cumulative consumer price inflation since 2020 (roughly one‑fifth) has contributed to upward pressure on both premiums and fees (U.S. News 360 Reviews; Forbes Home; Consumer Reports; Bankrate; BLS CPI).
What Does a Home Warranty Cover?
There are a variety of home warranty providers in the U.S., including established companies like American Home Shield and TotalProtect, as well as up-and-comers like Choice and the Home Service Club. Coverage varies widely by provider and plan. Some brands differentiate with longer workmanship guarantees or more flexible service models—for example, Cinch markets a 180‑day workmanship guarantee (Cinch), AFC Home Club lets you choose your own licensed contractor with pre‑approval (AFC Home Club), and Liberty Home Guard highlights a large add‑on catalog and a 60‑day workmanship guarantee (Liberty Home Guard). Major providers also offer broader add‑ons like limited roof‑leak coverage or smart‑device protection (see AHS plans & add‑ons). Always review the sample contract for covered causes of loss, caps, and exclusions (FTC advice).
Covered
Systems
- Air conditioning
- Heating
- Plumbing
- Electrical
- Garbage disposal
- Ceiling fans
- Doorbell
- Water heater
- Central vacuum
Appliances
- Refrigerator
- Dishwasher
- Range/oven/cooktop
- Clothes washer
- Clothes dryer
- Built-in microwave
- Freestanding ice maker
- Garage door opener
- Trash compactor
Not Covered
- Cosmetic defects and nonfunctional damage
- Improper use, installation, or lack of required maintenance
- Known or pre‑existing conditions not disclosed
- Events covered by home insurance (e.g., fire, theft) rather than wear‑and‑tear breakdowns
- Items under manufacturer warranties/recalls; many contracts also limit consequential damages (FTC warranty law)
What if I Need to Make a Claim?
If you need to make a claim, contact your provider as soon as a covered item fails. Most companies let you submit by phone, website, or mobile app, and many collect the service call fee when scheduling. Increasingly, providers offer live video or AR troubleshooting to speed triage and avoid unnecessary truck rolls (FTC consumer advice; Frontdoor app).
After you file, the company assigns a network technician and sets an appointment to repair or replace the item, subject to your plan’s limits and exclusions. Some providers allow you to use your own licensed contractor with prior approval (e.g., AFC Home Club). Be aware that service timelines and contractor availability vary by ZIP code and can be a driver of mixed consumer reviews (Frontdoor investor metrics; California complaint study).
Things to consider before buying a Home Warranty Policy
Read the sample contract carefully. Confirm waiting periods, what causes of failure are covered, dollar limits per item and per term, and any exclusions for pre‑existing conditions or maintenance. Understand liability limitations and whether consequential damages are excluded, which is common under U.S. warranty law (FTC warranty law; UCC §2‑719). Check renewal and cancellation terms: California and New York require clear auto‑renewal disclosures and easy online cancellation; the FTC also strengthened federal “negative option” rules for subscriptions in late 2024 (California ARL; New York ARL; FTC Negative Option Rule).
Compare multiple providers on total cost (premium + likely service fees + add‑ons), coverage caps, workmanship guarantees, contractor flexibility, and complaint history. Some examples: Cinch advertises a 180‑day workmanship guarantee (Cinch); AFC lets you choose your own contractor with pre‑approval and long workmanship coverage (AFC Home Club); Liberty Home Guard offers extensive add‑ons and a 60‑day guarantee (Liberty). Review independent signals like the National Home Service Contract Association tips, state oversight pages (e.g., Texas Residential Service Companies), and complaint ratios in California’s Home Protection category. Note that the FTC and Arizona AG obtained a $25 million settlement against Choice Home Warranty over alleged deceptive practices—prospective buyers should scrutinize marketing claims and denial criteria (FTC press release).
Right‑size coverage to your home. Make a list of major systems and appliances, identify required add‑ons, and model an annual budget that combines premiums with two to three service calls. Many households see total outlays around $800–$1,200 for mid‑tier plans in typical years, though actual costs vary by usage and market (U.S. News 360 Reviews; Consumer Reports). Expect mixed satisfaction overall—large providers report millions of annual service requests and renewal/retention rates in the mid‑70% range, indicating many customers perceive value while others cite issues with claim denials or delays (Frontdoor investor relations; FTC guidance).
Home Warranty Pros and Cons
Home warranties can aid budgeting and provide streamlined access to repair pros, but consumer satisfaction is mixed due to claim denials tied to exclusions/caps and service delays in some areas. Outcomes improve when buyers understand limits up front and choose plans aligned with their risk and contractor preferences (FTC advice; California complaint study; Frontdoor metrics).
Home Warranty Pros
- Predictable budgeting for wear‑and‑tear breakdowns (typical 2025 costs: about $45–$75 per month and $75–$150 per service call), potentially avoiding large surprise repair bills (U.S. News; Forbes Home)
- Access to vetted technicians, digital claim intake, and virtual triage; some providers add standout protections like 180‑day workmanship guarantees or allow customer‑chosen contractors (Frontdoor app; Cinch 180‑day guarantee; AFC contractor choice)
- Helpful in real‑estate transactions to reduce first‑year repair anxiety for older systems/appliances; coverage can be tailored via add‑ons (see AHS plans & add‑ons; FTC guidance)
Home Warranty Cons
- Coverage is limited by exclusions and dollar caps; denials for pre‑existing conditions, improper installation, or maintenance lapses are common drivers of dissatisfaction (FTC advice; California complaint trends)
- Service delays or limited contractor availability in certain ZIP codes can extend repair timelines and reduce perceived value (Frontdoor service volumes/renewals)
- Total cost can be higher than expected if you make few claims or add many options; auto‑renewal is common, so verify renewal notices and easy online cancellation rights before buying (California ARL; New York ARL; FTC Negative Option Rule)
FAQS
Do I have to pay for a home warranty if I’m buying a home?
If you’re purchasing a home, you might want to consider a home warranty. It isn’t required, but it can be negotiated in the sale (sometimes paid by the seller). Weigh 2025 cost norms (about $45–$75 per month with $75–$150 service fees) against the age and condition of the home’s systems/appliances, and read exclusions and caps so you know what is and isn’t covered (FTC advice; U.S. News cost ranges).
What are the benefits of a home warranty as a seller or buyer of a home?
Buyers or sellers can purchase home warranties. Sellers sometimes include a warranty to reassure buyers about near‑term repair costs on older systems; buyers can request one during negotiations. Value depends on the plan’s limits, exclusions, and service network. Clear expectation‑setting at closing (what’s covered, caps, and service fees) reduces disputes later and aligns with regulator guidance (FTC advice; California complaint benchmarking).
What are some things to do before buying a home warranty?
- Read the provider’s sample contract and the NAIC consumer guide; confirm caps, exclusions, and service‑fee options
- Compare home warranty companies & coverage plans, then check independent signals like state complaint ratios (CA Home Protection) and any BBB alerts (e.g., Choice)
- Make a list of important systems & appliances in your home
- See which plans cover those items & any potential stand-alone plans; note features like workmanship guarantees or contractor choice (e.g., Cinch, AFC)
- Estimate total cost & compare plans (premium + likely service fees + add‑ons), and verify auto‑renewal/cancellation rights (CA ARL; NY ARL)
