How Much Is a Home Warranty?

What Is a Home Warranty?

A home warranty covers the items in the plan for repair costs or replacements. What's covered depends on your warranty agreement but can include large appliances and electrical devices like televisions or kitchen and laundry appliances. Major home systems can also be part of the warranty policy, including plumbing, electrical, and HVAC. 

The warranty contract usually runs for a year and then must be renewed. During the contract period, if something covered by the warranty breaks down, requires repair, or wears out, you simply call your warranty provider with the details, and pay your deductible to cover the cost of the callout. 

Then the provider sends a technician to inspect the appliance or problematic system and make repairs. If it’s unrepairable, you usually receive a replacement or a payout to purchase a replacement. 

What Does a Home Warranty Cover?

Many home warranty plans are available, and you can usually tailor them to your specific needs. A basic home warranty usually just covers the major appliances, such as your oven, washing machine, dishwasher, and tumble dryer.

The advanced plans add coverage for built-in systems, like heating, plumbing, HVAC, and electrical. A home warranty plan usually does not cover garage door openers, spas and central vacuuming systems. Homeowners can purchase add-on coverage that pays for damage and repairs to those items. You can hire a local home inspector to better understand which appliances and systems need protection.

Home Warranty Prices

Expect to pay anywhere between $75 and $7,500 for a home warranty. The monthly premium may reach $75 or $900 per year, depending on the type of basic plan you select. Add-ons can drive up the monthly price to well over $150 per month, or $1,800 annually. The rest of the price depends on how many $75 to $125 service calls you need to make throughout the year.

Most companies offer multiple plans that cover your appliances, built-in systems, or both. The appliance plans typically include all kitchen and laundry appliances. The built-in system coverage may extend to your HVAC equipment, electrical components, and plumbing.

You can then customize your plan with add-on coverage for your swimming pool and spa, well pump, and other specialized systems. Many home warranty companies even offer coverage for your electronics.

Cost of Add-Ons for Home Warranties

Alongside the standard contract and coverage, you may want to tailor your warranty to cover any extra appliances, systems, or potential trouble spots. Take a look at some of the common home warranty add-ons and their typical costs.

Home Warranty Price Comparison by Company

Home warranties from the major brands range between$400 and $900 for the premium alone. They also charge between $2 and $35 for each add-on service you put on the plan. You can expect to pay $75 to $125 for every service call as well depending on your selected coverage level.

Home Warranty Cost per Year

The standard home warranty lasts for one year, but there are a few other options. If, for example, you're selling your home and you don't want an annual contract, you can get a month-to-month contract, which works out more costly per month than an annual plan, but less costly overall if you only need the plan for a month or two. 

Annual warranties are the standard for most existing properties and tend to cover the standard appliances and integral home systems. You may be able to get a better per-year cost by purchasing a multi-year contract, but for existing appliances and home systems, you may not be able to get more than a three- or five-year plan. 

New construction, extensive remodels, or home additions can get 10-year warranties that cover the structure rather than appliances and systems. Instead, new construction warranties cover the foundation, walls, framing, roofing, flooring, and similar. 

Home Protection Plan Cost Factors

Home warranty companies give each customer a custom price quote based on the following factors.

• Coverage level: Appliance plans cost $20 or more per month, while advanced plans are more

• Add-ons: Additional coverage adds up to $35 per system to the price of the monthly premium

• Home size: Homes with more square footage often have additional systems that need coverage

• Service call fee: Service call fees are typically adjustable, which changes the premium price

Home Warranty Cost to the Seller vs. Buyer

When you sell your home, buying an annual or monthly warranty can help make buyers feel more comfortable, so help the sale go faster and more smoothly. You can purchase a full year or a month-to-month contract as part of the property price. If you purchase an annual plan, you can then transfer that plan to the buyer when you complete contracts and finalize the sale of your property. 

A property buyer shouldn't have to pay any premiums during the term of the existing contract transferred to them as part of the property purchase, but they will have to pay for any service call charges. Plus, the buyer will have to renew the warranty or purchase a new contract when the existing one comes to an end.

Home Warranty Considerations

Every warranty and warranty provider is different, so it's crucial that you read all the small print and are fully aware of what your plan does and does not cover, any limitations, and if there's a waiting period.

Items Covered

The items covered in your warranty will depend on the type of plan you chose and what, if any, add-ons you purchased. Take a look at the standard home warranty types and their annual costs.

Remember, though, regardless of what type of warranty you choose, it's crucial not to make assumptions about what's covered. For example, with a basic protection plan or a standard systems warranty that covers major plumbing repairs, you may think you have full coverage. 

However, plumbing stoppages are usually an add-on to this type of plan, so the warranty won’t cover the cost of a clogged drain, sink, or toilet. But you'd still have to pay the callout fee if you mistakenly called your warranty provider and they sent out a technician, even though they can't fix the issue under your coverage plan. 

Perform your due diligence and be crystal clear on the terms of your warranty so the cost of appliance repair or systems breakdown, such as the cost of repairing your HVAC system, don’t catch you by surprise.

Coverage Limits

Coverage limits vary, so read the terms of your plan. If, during a pre-contract home inspection, an appliance is found to have a fault, then anything related to that fault will not be covered by your warranty. 

Additionally, you may only have coverage for a set dollar amount, either per callout, per appliance or system, or per year. 

Waiting Period

Often, you can’t use a warranty immediately after purchasing. The terms vary by policy, but, in general, there's a waiting period of between 10 and 30 days. You will not be able to claim for anything that goes wrong within that early waiting period. If, for example, your dishwasher develops a leak on day 29 of your 30-day waiting period, you cannot call in on day 31 of your policy and get that leak fixed under your warranty.