Carter Gaddis is a senior writer at USA TODAY Homefront. He is an experienced journalist who has written about roofing, sunrooms, title insurance and other home service topics. Carter has contributed to the TODAY SHOW parenting section, CBS SPORTS and ESPN, among other publications. He lives with his family in Central Florida, where he spends most weekends at theme parks or watching English soccer on TV.
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Home warranty coverage offers financial stability and peace of mind by limiting the stress and expense of broken household appliances and home systems. A home warranty plan covers some or all of the cost to replace or repair failing or worn-out items.
In addition, a home warranty extends coverage when a manufacturer’s warranty expires. By paying a monthly or annual premium, you can ensure protection for kitchen and laundry appliances, as well as electrical, plumbing and HVAC coverage.
Before you commit to a home warranty company, you must understand exactly what is and is not covered under your plan. It’s also important to know the costs involved, how to use your plan, your responsibilities as a homeowner and how to tell what level of home warranty coverage is right for you.
The scope of home warranty coverage can vary significantly based on the provider and plan you select. To understand what’s included in your coverage, carefully review the items and systems listed in your service agreement.
If you are confused about whether your service contract covers a particular item or system, contact a customer service representative for clarification.
Note that a home warranty is optional and covers specific items. Home insurance, on the other hand, is usually required by a mortgage company and covers physical damage related to storms, vandalism, fire or theft.
Home warranty companies usually structure their plans to cover an array of kitchen or laundry appliances, with separate plans that cover home systems. Most providers also offer a higher-priced plan that covers both appliances and systems.
Major appliances home warranty plans typically cover
Other plans might be geared toward coverage for your electrical, plumbing and HVAC systems.
Major system components home warranty plans typically cover
A few home warranty providers offer plans that combine coverage for a selection of appliances and systems. Comprehensive coverage that includes all appliances and systems often costs considerably more than the basic or midtier plans. Still, the added convenience might be worth it if your budget can absorb those additional costs.
If a home warranty plan does not cover a specific item or system, the provider may offer additional coverage options through add-ons. These components often exist outside the standard classification of indoor appliances and major home systems.
They can range in price from a few dollars to over $25 per month, depending on the item’s complexity.
Common optional add-ons
Most home warranty providers do not cover items that were broken or unusable before you signed the contract. These are referred to as “items with preexisting conditions.”
Additionally, many providers restrict claims within the first 30 days of the policy term. Some providers also limit the amount of money they’ll reimburse during an initial waiting period, which can last as long as 90 days.
As a homeowner, you’re responsible for proper item maintenance to ensure coverage. Most home warranty providers include a provision for normal wear and tear in their service agreements, but regular maintenance is required.
Common reasons for home warranty claim rejections
Home warranty costs can vary greatly based on the provider, the plan type, your geographical location, your home’s size and any extra items you choose to include in your home warranty coverage.
As you calculate your home warranty cost, consider the monthly or annual premiums, the service call fees and any additional costs you might incur during the life of your policy.
Our research into nine leading home warranty providers showed that the average monthly premium is $59 and the average annual premium is $703. Many companies offer additional months for free or a cost reduction if you pay an annual premium.
Generally, the more appliances and systems you want covered, the more expensive your premiums will be.
Your location might also be a factor. For example, our research shows that the lowest average monthly premium of $53 is available to homeowners in California, Florida, Nevada, Ohio and Virginia. Rhode Island’s average $67 monthly premium is the most expensive.
Californians have access to the lowest average annual premiums at $630, while Rhode Islanders are stuck with the most expensive average annual premium at $801.
Homeowners must pay a service call fee in addition to their premiums. A service call fee is required every time a repair or replacement job is scheduled.
Many home warranty companies require the homeowner to pay the service call fee directly to the technician before work can begin.
According to averages from our top nine providers, providers charge $75–$125 for service calls. The monthly or annual premiums are sometimes based on the service call fee. For example, if you pay service call fees of $125 each time, your monthly premium might be less. Conversely, if your service call fee is $100, you’ll pay a higher premium.
If your provider offers flexible service call fees, you should estimate how often you think you’ll need a technician and compare that to the total amount you’ll pay each year in premiums. Choose the option that makes the most sense for your budget.
Homeowners also must factor in potential out-of-pocket replacement or repair costs. This comes into play if a certain item or system’s dollar limit, or coverage cap, is less than the usual replacement cost.
Remember that most appliances, HVAC components, plumbing components and electrical components come with a manufacturer’s warranty of a year or longer that covers breakdowns, improper installation and other failures. Therefore, it’s important to know whether your items remain under the manufacturer’s warranty and to become familiar with the life expectancy of your household appliances and systems.
The chart below lists the average life expectancies and estimated replacement costs of the most commonly covered appliances and system components, according to data from the International Association of Certified Home Inspectors.
Appliance replacement costs reflect the listed retail prices for five major appliance manufacturers: GE, LG, Maytag, Samsung and Whirlpool. Replacement costs of system components reflect prices charged by Home Depot.
When deciding which home warranty to purchase, consider your coverage needs, your household budget and home warranty provider reputations.
Be prepared to conduct thorough research as you educate yourself on the potential benefits and costs of home warranty coverage from different providers.
The first step is to take stock of your home’s appliances and systems. Make a list of every kitchen and laundry appliance. If possible, include the time remaining on any manufacturers’ warranties that came with your appliances.
Next, think about your HVAC, plumbing and electrical systems. List every component a manufacturer’s warranty could cover and determine your expiration dates.
Finally, consider extra items around your home that a typical plan might not include. As you research providers, find out what they do and do not cover with their plans and add-ons.
If your manufacturers’ warranties have expired, think about how much you might have to pay out of pocket for repairs or replacements. Next, determine how much you can afford to pay a home warranty provider in monthly or annual premiums.
Then, consider what you could afford to pay if a major appliance or home system broke down unexpectedly. Compare that cost with the annual cost of a home warranty and choose the option that makes sense for you.
First, determine whether providers in your state are required to be licensed. Home warranty companies are regulated by statute in most states and are answerable to government consumer protection agencies. Some states place oversight responsibility on the insurance department, while others leave it to the state attorney general’s office.
Independent consumer guides such as the Better Business Bureau (BBB) and Trustpilot offer valuable insights into consumer sentiment. However, many home warranty owners use these avenues to lodge public complaints, so you shouldn’t assign too much weight to specific favorable or unfavorable reviews.
Rather, read through reviews to detect themes or patterns. For example, if a home warranty provider attracts multiple unfavorable reviews about rejected claims, ask a customer service rep about it.
You can also ask neighbors, friends and family to recommend a home warranty provider. Sometimes, a trusted “real-life” source is as useful as a BBB rating.
We recommend reading sample service agreements provided by multiple providers before signing a home warranty contract. These documents contain a comprehensive list of covered items, exclusions, coverage caps, cancellation policies, state-specific details and other vital information.
Some providers offer detailed, itemized lists of covered items in their sample service contracts. Look for information such as coverage limits on each item, an annual or aggregate coverage limit, and additional caveats such as exclusions for repairs or replacement of hard-to-reach items.
Look for these sections in a sample service contract:
The best home warranty companies provide excellent service and present a friendly face to their customers.
It should give you pause if a home warranty company fails to demonstrate efficient communication and helpful service at the beginning of the customer relationship. Think twice about a company if a representative takes longer than expected to respond to emails or phone calls.
Another red flag is a preponderance of unfavorable customer reviews. For example, if a home service provider’s BBB page contains many 1-star reviews about slow service or frequently rejected claims, ask about that before signing a contract.
Other red flags
Understanding how your home warranty coverage works is key to getting the most out of your purchase. Before you sign an agreement with a provider, make sure you become familiar with how to make a claim, what your responsibilities are as a homeowner and how to file a dispute with the company or a government agency.
Should you experience broken home appliances or systems, such as a broken dishwasher or a faulty electrical outlet, initiating a claim with your provider is the first step. Your service agreement should describe the claims process in writing.
Review the specifics of your contract to ensure the item is covered. Follow the claims instructions in your agreement. Many providers offer an online portal to file claims, while others require a direct phone call or email.
Be ready to describe the malfunction in detail. Provide photos if possible. If you keep updated maintenance records (which you ideally should), have those on hand when the technician arrives.
The home warranty company should handle scheduling, but you might be asked to speak with the technician directly to coordinate a day and time that works for everyone involved. Most companies require you to use a technician that they choose, but some — such as Elite Home Warranty — let you pick your own technician.
As mentioned, you are responsible for ensuring your appliances and home systems are in good working order under normal use. This means performing routine maintenance, such as replacing an AC filter and flushing HVAC lines.
[N]ote that home warranties usually only cover repairs to home systems and appliances if they’ve been properly maintained. Angel Conlin
[N]ote that home warranties usually only cover repairs to home systems and appliances if they’ve been properly maintained.
“It’s important to note that home warranties usually only cover repairs to home systems and appliances if they’ve been properly maintained,” said Angel Conlin, chief insurance and compliance officer at Kin Insurance. “For example, your warranty may not pay out on a malfunctioning dishwasher if the technician discovers rust on its covered components.”
You also are expected to understand your service agreement’s terms. If you have any questions, ask a company representative to clarify. You don’t want to be stuck with a broken clothes dryer you thought was covered, only to find that your plan excluded clothes dryers.
Be sure to read the section of your service agreement that outlines the process for lodging a formal complaint about the company. Some providers stipulate that disputes must be settled through independent arbitration.
Most states allow residents to file complaints with a consumer advocacy division, often through online forms. To find your state’s consumer protection agency, navigate to the USAGov website and type your state or territory into the search field.
Home warranty coverage is not for every homeowner. You may prefer to keep a “rainy day” savings fund for home repairs or item replacements.
Before you decide whether a home warranty is right for you, begin your research by requesting multiple quotes from reputable providers. If possible, request at least three estimates before you sign a service agreement.
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Editorial note: The name “Homefront” refers to the alliance between USA TODAY and Home Solutions that publishes review, comparison, and informational articles designed to help USA TODAY readers make smarter purchasing and investment decisions about their home. Under the alliance, Homefront provides and publishes research and articles about home service and home improvement topics.
Homefront has an affiliate disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Homefront editorial staff alone (see About Homefront). Homefront adheres to strict editorial integrity standards. The information is believed to be accurate as of the publish date, but always check the provider’s website for the most current information.
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