Owning a home comes with plenty of rewards, but it also means you’re on the hook when something breaks. Picture this: your water heater fails in the dead of winter, or your refrigerator stops cooling right before a family gathering. Repairs like these can quickly add up, leaving your budget stretched thin.
So, are home warranties worth it? Sometimes they are—but not always. It depends on your home, your finances, and the fine print. Here’s how to figure out if a home warranty actually makes sense for you.
What a Home Warranty Is and What It Covers
A home warranty is a service contract that helps pay for repairs or replacements when a major appliance or system in your home breaks down due to normal wear and tear. It’s not the same as homeowners insurance. A home warranty covers things insurance typically doesn’t—like a broken dishwasher, a failed water heater, or an HVAC system that suddenly quits.
Coverage varies by company and plan, but most standard home warranties include:
- Appliances: Refrigerator, oven, dishwasher, built-in microwave, washer, and dryer
- Systems: HVAC, electrical, plumbing, and water heaters
- Optional add-ons: Pools, septic systems, well pumps, or even roof leaks (usually at an extra cost)
If something breaks, you file a claim with your warranty provider. They send a technician to inspect the problem. If it’s covered, they repair or replace the item—you just pay a flat service fee.
See also: Best Home Warranty Companies of 2025
What It Costs (and What Repairs Normally Cost)
The average home warranty costs between $300 and $600 per year, or around $25 to $50 per month. On top of that, you’ll pay a service call fee of $50 to $100 every time a technician comes out.
So, is it worth the money? That depends on how those costs compare to common repairs. Here’s what you might pay out of pocket without a warranty:
- HVAC system: $150 to $1,500 for repairs; $5,000 to $12,000 for a full replacement
- Water heater: Around $500 to repair; $1,000 to $3,000 to replace
- Refrigerator: $200 to $500 for repairs; $1,000 or more to replace
- Dishwasher: $150 to $300 for repairs; $400 to $1,000 to replace
- Plumbing issues: $150 to $350 for minor repairs; up to $1,500+ for major work
One major repair can easily exceed the annual cost of a home warranty. But that only matters if the issue is covered—and if your claim isn’t denied.
Pros & Cons of Home Warranties
Home warranties can be helpful in some situations, but they’re not perfect. Here’s a look at both sides.
Pros
- Peace of mind – A warranty can take the stress out of unexpected breakdowns, especially if you don’t have a large emergency fund.
- Covers big-ticket items – Plans often include expensive systems like HVAC, electrical, and plumbing.
- Easier scheduling – The warranty company handles the technician, so you don’t have to search for one.
- Budgeting is simpler – You’ll know the cost of the premium and service fee upfront, which can help with planning.
- Customizable plans – Most providers let you add coverage for things like pools or septic tanks.
Cons
- Coverage caps – Many warranties limit how much they’ll pay per repair or per year. You might still owe money if the job costs more than the cap.
- Claim denials – If the damage is blamed on poor maintenance, improper installation, or a pre-existing issue, your claim could be denied.
- You don’t choose the technician – The warranty company decides who does the work, and you may have little say in the repair or replacement.
- Service fees can add up – If you have multiple issues in a year, those $75 or $100 service calls can stack up quickly.
When a Home Warranty Might Make Sense
A home warranty isn’t the right fit for everyone. But there are situations where it could be a smart move.
- Your home has older appliances and systems – If your HVAC, water heater, or electrical system is aging, a warranty could save you money when things start to fail.
- You don’t have a large emergency fund – If a $5,000 repair would wreck your budget, paying for a warranty might bring peace of mind.
- You’re not handy or don’t want to deal with repairs – If you’d rather not track down contractors or figure out what’s wrong, a warranty can simplify the process.
- You’re buying or selling a home – Many people buy warranties during a home purchase for added protection during the first year.
If you fall into one of these categories, the cost of a home warranty might be easier to justify—especially if you want predictable expenses and fewer repair surprises.
When You’re Better Off Without a Home Warranty
In some cases, a home warranty just doesn’t make sense—and could end up being a waste of money. Here’s when you might want to skip it:
- Your appliances are still under manufacturer warranties – If your fridge or HVAC system is new, the original warranty may already cover repairs.
- You have a solid emergency fund – If you can cover surprise repairs without financial stress, you might prefer to save the premium and pay out of pocket.
- You’re picky about who does the work – With a warranty, the company picks the technician. If you prefer hiring your own trusted contractor, a warranty might feel restrictive.
- You’re in a newly built home – Most new homes come with builder warranties that cover systems and appliances for at least a year.
- You don’t want to deal with red tape – Claims can be denied due to maintenance issues, unclear contract terms, or small technicalities. If you don’t want to deal with back-and-forth disputes, the hassle may not be worth it.
If your home is newer, your systems are in good shape, and you have the financial cushion to cover repairs, you’re probably better off without a home warranty.
How to Pick the Right Home Warranty Company
If you’re considering a home warranty, choosing the right provider is everything. Some companies offer solid coverage and responsive service. Others are known for delays, fine print, and denied claims. Here’s how to find one you can trust:
- Read the sample contract – Always review the full terms. Look for coverage limits, exclusions, and maintenance requirements.
- Check customer reviews – Look up real customer experiences on sites like the Better Business Bureau, Trustpilot, and Consumer Affairs.
- Compare plans side by side – See what each plan covers and what it doesn’t. Some plans include only basic appliances, while others bundle in HVAC and plumbing.
- Ask about claim limits – Some companies cap payouts at $500 per appliance or $1,000 per system. That won’t go far if your HVAC needs replacing.
- Watch for red flags – Be cautious of vague terms, excessive service fees, or long wait times for repairs.
Some of the more reliable companies in the space include Choice Home Warranty, Advanced Home Warranty, and Liberty Home Guard. Just remember—no provider is perfect. The key is knowing what you’re getting and what the plan actually covers.
Final Thoughts
A home warranty can be helpful if you want to protect your budget from big repair bills. If your home has aging appliances, or you’d rather pay a predictable fee than face a $7,000 HVAC replacement, a home warranty might be worth it.
But it’s not always the best choice. If you have newer systems, a solid savings buffer, or you’d rather choose your own repair people, you may not get enough value from the coverage to justify the cost.
To make the best call, compare repair costs to the warranty’s premium and service fees. Then read the fine print before signing up. The right home warranty can save you thousands—or end up being an expensive headache. It all comes down to your home, your risk tolerance, and your expectations.
Frequently Asked Questions
How long does a home warranty policy last?
Most home warranty policies last for one year. Some companies offer multi-year options, but the standard plan renews annually. When your policy ends, you can choose to renew or switch to a different provider.
How do I file a home warranty claim?
Start by contacting your home warranty company online or by phone. You’ll describe the issue, and they’ll assign a technician to inspect and repair the item—usually within a few business days. Be ready to pay a service fee at the time of the visit.
How long does it take to process a home warranty claim?
Most companies send a technician within 48 to 72 hours after you file a claim. If the issue is urgent—like a broken HVAC system in extreme weather—some providers offer expedited service. Exact timing depends on the provider and the nature of the problem.
Can I use my own contractor for repairs?
In most cases, no. Home warranty companies require you to use their approved network of service providers. If you hire your own contractor without pre-approval, the warranty likely won’t cover the cost.
What happens if a repair exceeds the coverage limit?
If the cost to fix or replace an item goes over your plan’s payout cap, you’ll have to pay the difference out of pocket. For example, if your warranty covers up to $2,000 for HVAC repairs but the job costs $3,000, you’ll be responsible for the extra $1,000.
