Home Warranty Cost - 2020 Plans and Coverage

By Kealia Reynolds | Advertiser Disclosure

The average home warranty cost will vary based on the type of coverage you select, any additional benefits and services you add to your plan, where you live, the size of your home, and the home warranty company you purchase from.

Regardless of the actual price of your home protection plan, the cost is well worth it when it comes to protecting your major home systems and appliances. Keep reading to learn what you can expect to pay for a home warranty and which home warranty plan is best for your budget.

How much does a home warranty cost?

A one-year home warranty typically costs around $300–$600 a year ($300 for basic coverage and $600 for more comprehensive plans). Most home warranties in this price range can cover over $20,000 worth of a home’s systems and appliances.

However, a home warranty may not cover the entire repair or replacement needed, meaning that you’ll probably be contributing some out-of-pocket costs in certain situations. The cost of repairing or replacing a system will depend solely on the type of coverage you have, so be sure to read the fine print before entering into a service contract to understand the limitations and exclusions on coverage.

Summary of home warranty costs:

  • Minimum monthly cost: $20
  • Maximum monthly cost: $115
  • Average cost: $25–$50
  • Average service fee: $75–$125

Breaking down the cost of a home warranty

An annual home warranty cost can be broken down into a monthly premium and service fees. Home warranty premiums cost around $25–$50 each month, however, you might be able to save some money by enrolling in an annual premium or by electing into a three- to five-year home warranty plan instead of a one-year plan (the cost of some one-year plans will increase year after year).

In addition to the monthly premium, you’ll also have to pay a service fee, or deductible, anytime a service claim is approved. Most home warranty companies will charge a non-negotiable, non-refundable service call fee of $75–$125. Note: there are some home warranty companies, like HomeServe USA and Complete Protection, that don’t charge a service fee.

Get a free quote from Choice Home Warranty today

Home warranty cost comparison

In 2018, 40% of American adults reported that they didn’t have enough savings to cover a $400 emergency bill. If you can identify with that situation, you probably don’t have enough money to spend on a broken dishwasher.

To most of us, $25 a month for a home warranty sounds much more manageable than a $1,000 dishwasher replacement. To show you how affordable a home warranty can be, we’ve stacked the average monthly cost of a home protection plan against other items we regularly spend our money on each month.

A $30/month ($360 a year) home warranty is equivalent to …

  • 9 grande lattes from Starbucks
  • 3 movie tickets (not including popcorn)
  • 1 dinner for two

Average savings with a home warranty

Repairing or replacing major home appliances and systems without a warranty can seem challenging, especially if you’re in a tight financial spot. Here’s what you could expect to save with a home warranty.

System/Appliance Potential savings
Heating $1,500
Air conditioner $1,500
Plumbing $643–$656
Electrical $500
Ductwork $544
Sewer line $416
Toilets $656
Exhaust fan/ceiling fan $500
Water heater $1,037
Refrigerator $1,306
Ice maker $550
Oven/stove $1,607
Dishwasher 1,683
Washer/dryer $1,466–$2,932
Water dispenser $785
Garage door opener $916
Garbage disposal $995
Doorbell $300

Home warranty vs. homeowners insurance

While a home warranty covers repairs and replacements on major home systems and appliances, homeowners insurance covers the structural foundation of your house and personal belongings in the event of a fire, storm, flood, burglary, or other natural disasters. Home buyers are often required to purchase homeowners insurance in addition to a mortgage, while a home warranty is fully optional.

Cost comparison of a home warranty vs. homeowners insurance

Home warranty Homeowners insurance
Cost $300–$600 per year $600–2,000 per year
Coverage Most major appliances and systems Structural damage, property loss, liability, and short-term housing costs
Exclusions Items won’t be covered if they haven’t broken down to normal wear and tear or weren’t properly maintained. Coverage is limited to perils—such as natural disasters and theft—named by the insurance policy
Other factors You’ll have to pay a small service fee when the home warranty company sends a tech to your home to diagnose the issue The lower your deductible, the higher your annual home insurance policy will cost

A home warranty provides reassurance and protection if a major system or appliance breaks down and can help cover repairs and replacements during the listing period.

Is a home warranty worth the cost?

In our opinion, a home warranty is definitely worth the cost. Not only does this home appliance insurance offer extensive protection for major home systems and appliances, it saves you money in the long run and gives you peace of mind.

For buyers, it provides reassurance if a major system or appliance breaks down. For sellers, it can help cover repairs and replacements during the listing period and can be included as a sweet deal to lock in the house (oftentimes, sellers will offer to pay for the first year of a home warranty to entice buyers to finalize purchase).

Though homeowners insurance may cover some issues faced by homeowners, a home warranty plan provides complete protection over home systems and appliances.

How to buy a home warranty

Before buying a home warranty, do your research. Read consumer reviews to compare the best home warranty providers and look at BBB ratings and complaints, customer satisfaction, coverage, exclusions, and home warranty features.

Consumer home warranty reviews tend to be subjective while third-party reviews tend to be objective—both are helpful when making a decision. You should also ask your family, friends, and neighbors about how much their home warranty cost and get insight on which providers they prefer.

Most affordable home warranties of 2020

These are some of the most cost-efficient home warranty companies based on monthly premiums, service fees, and optional add-on costs.

Name

Choice Home Warranty

Description

Monthly premiums: $36–$44 per month
Service fee: $85
Plans: 2 plans + optional add-ons
BBB rating: B-
Availability: All states except CA, OK, and WA

Score
7.8 / 10
Name

Select Home Warranty

Description

Monthly premiums: $36–$38 per month
Service fee: $75
Plans: 3 plans + optional add-ons
BBB rating: B
Availability: All states except NV, NY, WA, and WI

Score
8.5 / 10
Name

First American Home Warranty

Description

Monthly premiums: $28–$43 per month
Service fee: $75
Plans: 2 plans + optional add-ons
BBB rating: B+
Availability: Not available in AK, CT, DE, HI, IL, LA, ME, MA, MS, MN, NH, NJ, NY, ND, RI, VT, or WI

Score
6.6 / 10
Name

2-10 Home Buyers Warranty

Description

Monthly premiums: $34–$46 per month
Service fee: $85
Plans: 3 plans + optional add-ons
BBB rating: A
Availability: All states except AK, HI, NH, OK, WI, and WY

Score
8.5 / 10
Name

Landmark Home Warranty

Description

Monthly premiums: $35–$56 per month
Service fee: $60–$100
Plans: 2 plans + optional add-ons
BBB rating: A-
Availability: AZ, ID, NV, OR, TX, and UT

Score
6.9 / 10
Name

HomeServe USA

Description

Monthly premiums: $4.99–$55.99 per month
Service fee: N/A
Plans: 17 plans
BBB rating: A+
Availability: Nationwide

Score
8.0 / 10
Name

Blue Ribbon

Description

Monthly premiums: $26.79–$56.79 per month
Service fee: $65
Plans: 3 plans + optional add-ons
BBB rating: A+
Availability: Only in Colorado

Score
8.0 / 10

Most home warranties in the average price range of $300–$600 can cover over $20,000 worth of a home’s systems and appliances. However, the exact home warranty cost will depend on what type of coverage you opt for, where you live, and the home warranty company you buy from.

Frequently asked questions

What is a home warranty?

A home warranty is an optional service contract that covers the cost of repairs and replacements for major home systems and appliances that break down due to normal wear and tear.

Do I need a home inspection before purchasing coverage?

No, most home warranty companies won’t require you to get an inspection before coverage starts, however, we recommend scheduling one so you can have an idea of what items in your home have pre-existing conditions and may not be covered by a warranty.

Will the cost of a home warranty be higher if I have an older home?

While some home warranty companies will charge you more if you live in an older home, there are others that won’t, such as Choice Home Warranty and America’s First Choice Home Club.

What does a home warranty cover?

Home warranty coverage will depend on the type of plan and provider you choose. A basic home warranty plan covers major systems and appliances in the house, including, but not limited to heating and air conditioning, electrical systems, plumbing, and appliances like your dishwasher, oven, and refrigerator. A basic plan is the best home warranty option for those who want simple coverage to ensure the major components of the house function properly. On average, this type of home warranty costs $25 a month.

A comprehensive home warranty plan, also called a combination plan, includes everything under a basic plan, plus additional items like alarm wiring, smoke detectors, trash compactors, and central vacuuming. This is the best home warranty plan for those who want total protection of all appliances and systems. A comprehensive home warranty typically costs $50 a month.

In addition to these two types of home warranties, some home warranty companies will offer á la carte menus that allow customers to customize their plans. Popular add-ons include pool and spa equipment and additional appliances.

Who is the ideal home warranty customer?

Though we recommend home warranty plans for anyone who owns a home, we especially recommend purchasing a home warranty for first-time homebuyers with no experience in owning a home. Home warranty plans also make sense for people who don’t feel confident making repairs or installing new systems on their own. It’s a time-saver for those who don’t have the time to research different contractors and hire a skilled individual to make a repair or replacement.

Additionally, home warranties are great for rental property owners who manage multiple properties. Not only can landlords bake the cost of a home warranty into their tenants’ monthly rent, they can save on out-of-pocket costs for major repairs and replacements.

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