The Essential Guide to Home Warranty Programs: Are They Really Worth It?

While owning a home is part of the American dream, repair costs can be a nightmare. Even minor fixes add up, and major system failures can cost thousands. A recent Bankrate report found that 60 percent of U.S. households couldn’t cover a $1,000 unexpected expense without relying on a credit card. To help ease the financial pain of surprise home repairs, some homeowners turn to home warranty programs. But are they worth it? Here’s what you need to know, with insights from real estate broker Beatrice de Jong and Lindsay LaBonte of Applied Mortgage.

What Are Home Warranty Programs?

A home warranty is a service contract that homeowners purchase annually to help cover the repair or replacement costs of major home systems and appliances, such as HVAC systems and major appliances.

How Much Do Home Warranty Programs Cost?

Home warranty premium costs range from $480 to $1080 annually, depending on the company and level of coverage. In addition to the premium, you’ll pay a service fee each time a contractor visits for a repair or diagnosis. Expect to pay between $75 to $150 per visit, depending on the company, your location, and service tier.

Home Warranty Subscription Tiers, Explained

Most home warranty companies offer three coverage tiers.

• The base tier often covers appliances or HVAC, electrical and plumbing systems for $480 to $540 per year.
• Mid-level plans typically cover systems and appliances for $600 to $780 annually.
• Top-tier policies, which cost $840 to $1,080 per year, include systems, appliances and extras, like minor roof repairs.

Many companies also offer add-ons for items like central vacuums, instant hot water dispensers, pool equipment or septic systems, says DeJong.

Home Warranty Programs Pros & Cons

Pros

• Peace of mind: Home warranty programs offer protection against costly repairs, making them ideal for first-time buyers or homes with aging systems.
• Simplified repair process: File a claim, and the warranty company dispatches contractors to diagnose and fix issues.
• Assist in real estate deals: “In many cases, the seller may cover the cost of the home warranty as part of the negotiation,” de Jong says, offering buyers peace of mind.

Cons

• Delayed repair process: “Experiences with home warranty providers can differ significantly,” de Jong says. “Some companies have been criticized for slow response times or disputes over coverage eligibility.”
• Plan exclusions: Fine print can lead to your claim being denied by the company.

Are Home Warranty Programs Worth It?

“In my experience, these products rarely live up to the marketing,” LaBonte says. “Premiums tend to be high, coverage is narrow, and the fine print often excludes the very issues that arise.” Home warranty programs often don’t cover cosmetic damage, rust, corrosion and non-critical parts like shelves or knobs. Claims are also likely denied if failure results from improper installation, misuse or poor maintenance.

FAQ

When should I subscribe to a home warranty program?

You can buy a home warranty policy anytime of the year, but most have a 30-day wait period for new claims. If your appliances and systems are new, a warranty program may not be necessary. However, if they’re older and nearing the end of their lifespan, it could be a smart investment.

What is the best home warranty program?

The best home warranty program will offer what matters most to you in coverage and service. Choice Home Warranty and Select Home Warranty offer budget-friendly policies, while First American Home Warranty provides higher coverage limits ideal for luxury appliances and systems. ARW Home and American Home Shield stand out by allowing you to choose your own contractor while Cinch Home Services and Liberty Home Guard have high customer satisfaction rates.

Should I pay for a home warranty program if my appliances are under warranty?

There’s no need to have home warranty coverage for appliances still under the manufacturer’s warranty.

About the Experts

• Beatrice de Jong is a real estate broker with Beverly Hills Estates in Los Angeles, California. Ms. de Jong previously worked for Open Listings as the Director of Residential Sales and OpenDoor as a Consumer Trends Analyst. She has over ten years experience in the real estate industry.
• Lindsay LaBonte is a Loan Originator at Applied Mortgage in Northampton, Massachusetts. She has over 18 years of industry experience.

Source

• Bankrate Annual Emergency Savings Report (2025)

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