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What is a home warranty?
When home appliances and systems break down, home warranties help cover the cost of repair or replacement. We’ve done the research to help find the best home warranty for you.
More about home warranties
A home warranty is a service plan for the systems and appliances in your home. Systems are items like plumbing, electrical, and air conditioning that are interwoven into the structure of your home. Appliances are easier to remove and replace. Examples of appliances include fridges, microwaves, clothes washers, and garage door openers.
When a covered item breaks in your home, the warranty company sends a technician to repair the item. The homeowner pays a service fee to the technician, and if the repair is covered by the policy, the company will cover the cost of repair. If the item can’t be repaired, most companies assist with replacement.
It’s important to note that each warranty provider has their own contract or terms and conditions. These terms indicate the maximum payouts the company will give for different items, as well as which reasons for failure are eligible for payment. For example, most home warranty plans do not cover issues arising from rust, mold, or damage from an accident.
Home warranties aren’t technically warranties, which are provided by a manufacturer. Instead, these products are service contracts for your home’s systems and appliances.
Most companies have 24/7 service lines, so homeowners can report failures right when they happen. Companies with good service schedule technicians quickly and review the technician’s performance.
What does a home warranty cover?
Home warranty policies cover a collection of items in your home against malfunction from everyday wear and tear. Some plans cover only appliances, some cover only systems, and some cover a combination of both.
Typical Home Warranty Plan
The type of plan most popular with homeowners is a combo plan, which combines coverage for systems and appliances in the home. A standard combo plan covers kitchen appliances, electrical, plumbing, washer, dryer, and heating and air conditioning systems.
The major items commonly covered under a combo home warranty plan include:
- Electrical
- Plumbing
- Heating
- Air conditioning
- Water heater
- Washer & dryer
- Dishwasher
- Refrigerator
- Oven/Stove
- Garage door opener3
Different home warranty companies cover different items, so it’s important to read the plan details carefully. Deluxe plans often cover major appliances listed above and smaller items such as ceiling fans, hot water dispensers, garbage disposals, and roof leak coverage.
Extra coverage is available for things like a pool and spa, sump pump, extra refrigerator, central vacuum, septic pump, standalone freezer, and tankless water heater. Adding these items requires an additional fee.
Many home warranty companies, such as American Home Shield and AFC Home Club, offer home electronics coverage as a plan add-on. And some companies offer additional services such as home insurance or coverage for outdoor sewer and water lines.
What’s Not Covered by a Warranty Plan?
Home warranty coverage has a specific purpose: to help with mechanical failures from wear and tear. Warranties aren’t meant to cover every possible failure, and each company has different limitations. The following situations are not typically eligible for coverage under a home warranty plan:
- Items under manufacturer’s warranty
- Maintenance, like changing AC filter and annual HVAC tune-ups
- Breakdown from rust, corrosion, or lack of maintenance
- Damage from weather, fire, or accidents
- Items that are exterior to the home, such as exterior wiring and plumbing.
Note that in some cases, exterior items such as septic pumps, exterior water lines, pool and spa components (including things like exterior electrical wiring) are covered as add-ons to a home warranty plan.
On any given item, a warranty has a limit, or cap, for coverage. The limit is listed in the policy’s contract, and it dictates the maximum the company will pay out for claims on that item. The limit on air conditioning, for instance, is commonly set at $2,000 per policy term.
What’s A Service Fee?
With or without a home warranty, technicians charge a minimum fee to come to a customer’s home for repairs. This is called a service fee, sometimes referred to as a deductible.
With a home warranty, the fee is set by the warranty plan, so homeowners pay the same service fee no matter how expensive the technician’s fee is. This allows homeowners to budget for repairs. Depending on the home warranty company, the customer pays this fee either to the company or directly to the technician.
Service fees range from $45-$125, with most customers opting for options averaging between $75 and $100. Plans with a higher service fee are lower in price than plans with a lower service fee. The trade-off is that it costs more each time you need service. While a high service fee results in a lower cost, customers with older homes may choose a lower service fee in case they need frequent repairs.
What to look for in a warranty:
- Pricing and contract info should be transparent and available online.
- Some companies raise your rates each year. Ask before you sign up.
- Check for Better Business Bureau® accreditation.
- Caps on appliances are important, but so is customer service.
- Read the details to find out which items the warranty plan covers.
Our Top Home Warranty Picks
AFC Home Warranty
AFC Special Offer: Up to $250 off plus Free roof leak coverage
- Choose Your Own Technician
- Life-Time Work Guarantee
- Flexible Coverage
- 24/7 Live Suport
Since 2009, AFC Home Warranty has protected homeowners from unexpected costs, making them one of the more established companies on our list. They accomplish this by giving homeowners plenty of flexibility in both pricing, coverage, and service experience. For example, they allow homeowners the option to choose their own technician, something that is uncommon among warranty companies.
AFC Home Warranty offers four different plans: Silver, Gold, Platinum, and Diamond. The silver plan covers appliances, and the Gold, Platinum, and Diamond are combination plans. Customers can purchase a systems-only plan, but they must call in to do so since the plan is not marketed online. Plan lengths of one and three years are available.
The Diamond plan is AFC’s newest plan, released at the beginning of 2024. It combines a traditional home warranty combo plan with coverage for exterior sewer and water lines as well as electronics coverage. While this plan is more expensive than typical home warranty plans, it also offers coverages that are difficult to find in one place.
Beside the plan coverage, AFC Home Warranty offers a broad range of add-ons like pool & spa, sump pump, extra fridge, standalone freezer, electronics, roof leak coverage, central vac, or septic pump. Plan prices without add-ons range between $300 and $600 with discounts available on three-year plans and multiple properties..
Homeowners can choose their service fee: $75, $100, or $125. The service fee affects the premium, so homeowners have plenty of pricing options for coverage.
AFC offers the longest workmanship guarantee in the industry. They guarantee repairs for the life of the plan, which can be up to three years. They also offer in-house service, which may provide better customer service than a company staffed mainly by outsourced call centers.
In terms of home warranty companies, AFC Home Warranty is transparent in their marketing. Their terms and pricing are available online, and customers have access to their own personal account manager, making it easy to get questions answered and issues resolved. As of February of 2024, their Better Business Bureau star-rating is 2.87, which is twice as high as other companies on this list.
The downside of AFC is that they are not the cheapest option on the list. Their service fee is also $15 higher than the median price on our list, but that could be a sign that they employ higher quality technicians. Customers in California, Washington, and Hawaii are currently ineligible for coverage.
Choice Home Warranty
- 30 Day Waiting Period
- 90 Day Work Guarantee Parts/Labor
- Can get free months at signup
- $50 Cancellation Fee
You may know of this company from their TV commercials, in which former heavyweight boxer George Foreman spars with a shady repairman. Choice Home Warranty is one of the bigger names in the industry, and they have covered over 900,000 homes.
Choice Home Warranty provides two plans: the Basic and the Total. Both are combination plans covering systems and appliances. The Basic plan does not include AC, washer, dryer, or refrigerator, so many customers gravitate towards the Total Plan.
Choice offers a large collection of add-ons, including septic tank pumping, which is rare for the industry; however, septic tank coverage and pumping coverage are separate, meaning customers pay for two add-ons to get this coverage. Current pricing without add-ons ranges from $41 to $50 monthly and from $470 to $570.
For certain payment options, Choice Home Warranty adds a free month of coverage, and service fees are as low as $60. Customers benefit from low rates, a network of over 15,000 technicians, and 24 hour claims submission via phone or web.
One downside to Choice’s terms: low caps on some items, like a $1,500 per term cap on the heating system. However, some of this is offset by the low cost of their plans. Coverage is not available in California or Washington.
Additionally, according to the Better Business Bureau, Choice Home Warranty is currently facing government actions for their business practices
Select Home Warranty
- 30 Day Waiting Period
- 90 Day Work Guarantee Parts/Labor
- Need maintenance records
- $75 Cancellation Fee
Select Home Warranty’s coverage comes in the form of three different plans. The Bronze plan covers eight appliances, the Gold plan covers six systems, and the Platinum plan, a combo plan, is their most comprehensive. The itemized coverage is on par with the other companies on this list, and the Platinum plan includes ceiling fans, which many companies do not cover.
Besides the regular selection of add-ons, Select offers coverage for the lawn-sprinkler system.
Plans start at $379 annually and include two free months of coverage. The service fee starts at $60.
Select Home Warranty gives prospective customers some enticing incentives to buy. Aside from low prices and two free months for signing up, they also offer a free roof leakage add-on; however, customers have to manually select it from the add-ons at checkout to receive the coverage, and it is easy to miss.
There is no maximum to the number of claims customers can make, and customers submit claims online or over the 24/7 service line.
Select Home Warranty isn’t active in all 50 states. They don’t operate in California, Nevada, or New York. Their contract also has a few drawbacks. In particular, their terms state that without maintenance records, the company will not pay more than $150 towards any issue. While other companies also require maintenance on certain items, homeowners thinking about Select might want to go over that issue with a sales rep.
How much does a home warranty cost?
Many factors, such as the level of coverage, the company you choose, the square footage of your home, the service fee, and the payment method, affect the total cost of a warranty plan. Plans range in cost from the $400s to $900 and above. Average costs for a combination warranty plan in 2024 hover between $600-$650. As with other services, you get what you pay for with a home warranty: a plan that costs $300 does not usually offer coverage that is as complete, flexible, and convenient as a plan with a $600 price tag.
How does a home warranty work?
The process is fairly simple. When a customer needs something fixed in their home, they call their home warranty company. If the item is something the company covers, they will schedule a technician to appear at the home and diagnose the issue. Most warranty companies do not employ their own technicians. Instead, they hire with a third-party contractor. Some home warranties allow you to choose the contractor who makes the diagnosis and repairs.
After the technician has made a diagnosis, the home warranty company will provide their coverage. The coverage made pay for a full replacement, or for a more limited repair. The price that a warranty company pays towards a repair is subject to the limitations of the contract for the customer’s plan.
Once the repair or replacement is complete, the warranty company will guarantee that repair for a given period of time.
What’s a work guarantee?
When technicians make a repair, they often guarantee that repair for a stated period of time. That period of time is known as the workmanship guarantee, and if the repair fails during the guarantee, the technician will come out and complete the repair again free of charge. A work guarantee is a mark of quality and dedication to customer satisfaction.
Not every technician’s work guarantee is the same length, so home warranty plans help their customers by offering a standard work guarantee. If the repair fails during the guarantee, customers do not have to pay for repairs or pay the service fee.
Home warranties offer workmanship guarantee lengths between 30 days and the life of the plan, which can be over a year. A longer guarantee could be an indicator that the company uses better technicians who do quality work.
How to choose the right home warranty for you
Home warranties are complex services, even if they appear to work in a simple manner. By knowing your own needs and expectations, you’ll be able to find a plan that provides protection for your budget in the situations where you’ll need it most.
List Your Needs
Look around your home and make a list of the items that you would like to have covered. For items that are particularly old, that cause you to worry, or that you can’t live without, put a star next to them. If you have any brand-new appliances or systems, leave them off the list. They’ll likely be covered by a manufacturer’s warranty. In that case, the manufacturer, and not the home warranty company, will reimburse you for repairs.
Build Your Budget
This can be difficult to do, especially if you’re a first-time homeowner. The rule of thumb is to be prepared to spend 1% to 2% of the value of your home on household repairs each year. That total includes both minor and major appliances and systems as well as things like gutters, windows, etc. Keep in mind, though, that items like gutters, walkways, and flooring also tend to last longer than home appliances. In the end, your budget will be the amount that you are comfortable setting aside to keep your home running smoothly.
Check The Contract
If you’ve found a company and a plan that fits your needs, speak to a sales representative. If you’re not sure what to talk about, ask about the waiting period, caps, customer service, work guarantee, waiting period, technicians they use, and potential discounts.
Then read the contract for the details. Most contracts are long and tedious, but it helps to know the coverage you are purchasing. Some homeowners purchase their coverage, then take advantage of the standard 30-day waiting period to go through their contract and ask questions. This is because most companies allow customers to receive a full refund if they cancel during the waiting period.
What is the waiting period?
In most cases, home warranties begin with a 30-day waiting period. During this period, the customer can cancel at any time for a full refund (make sure this is the case before signing up with a company). Also during this period, the warranty company does not provide coverage to the customer.
The waiting period is designed to stop fraudsters from purchasing a home warranty for appliances that are already broken. Warranties are meant to protect against future breakdowns, not pre-existing conditions.
In some cases, such as when the home warranty is purchased through a real estate transaction, the 30-day waiting period may be waived. This is helpful to home buyers, as it means that their coverage is effective as soon as they purchase their home.
