What Does a Home Warranty Cover? (2024)

Are you tired of unexpected repair bills wreaking havoc on your budget? Homeownership brings joy, but it also comes with its fair share of responsibilities — including maintenance and repairs. And let’s face it, appliances and home systems have a knack for breaking down at the most inconvenient times. So, what exactly does a home warranty cover, and how can it save you from the headache of costly repairs? 

In general, the best home warranty companies will cover your most-used appliances — like your laundry machines, dishwasher, and stove — as well as major home systems like your HVAC, plumbing systems, and electrical. 

In this article, I’ll go in-depth about home warranty coverage and what you’ll pay for that coverage. I’ve also selected a few of the best home warranty plans that cover repairs on those big-ticket items you’re most concerned about, which you’ll see below.

What Systems and Appliances Are Covered Under a Home Warranty?

Every home warranty company has its own list of home systems and appliances covered under their plans. Most companies have a “basic” coverage option with a smaller list of items covered, plus a premium coverage plan with a more expansive list.

As you explore home warranty plans, the following list outlines some of the most prevalent home appliances and home systems typically included in coverage options. I compared dozens of individual service contracts to differentiate between basic and premium home warranty coverage. Keep these components and features in mind as you shop for coverage. 

Most home warranty providers also offer a series of optional add-ons. You can add-on coverage for less common appliances or home systems into your home warranty plan for an additional fee. Add-on options include: 

• Extra appliances, like a freestanding freezer or additional washing machine and drying combo set
• Coverage for a guest unit
• Pool/spa
• Septic system
• Septic tank
• Sump pump
• Water softener
• Well pump

How to Check Your Home Warranty Coverage

Home warranty providers should clearly outline the home systems they cover in their plans and those they don’t. The company’s website will provide a list, and a sample contract will also spell it out. As you look through home warranty coverage, you’ll also run into some common industry terms that are important to understand. These include: 

• Coverage limits: Your coverage limit is the total dollar value amount that your home warranty provider will pay per policy term for each covered item. For example, if an air conditioner has a coverage limit of $2,000, it means that the home warranty provider will not pay technicians more than $2,000 per year to fix this system. 
• Service fee: Your service fee is what you pay to your home warranty provider each time you file a claim. Make sure to select a service fee that you can afford each time you call for a repair or replacement. Your service fee should not change, regardless of the cost of repairs.
• Exclusions: All home warranty plans include exclusions, which are conditions that are not covered under your plan. Most policies include exclusions related to items in the plan — for example, coverage for air conditioning systems often excludes damage to smart home connectivity controls. 
• Pre-existing conditions: Pre-existing conditions are problems with your home that were present before you bought your home warranty plan. In most cases, home warranties will not cover pre-existing conditions. Some home warranties may require you to provide maintenance records to prove that your home systems and appliances are in proper order before granting coverage. However, other home warranty companies will cover a pre-existing condition if you didn’t know about it when you bought your plan.

How Much Does a Home Warranty Cost?

The average cost of a home warranty plan in the United States is $50 per month, with a service fee of $75 to $125 per home warranty claim. The table below summarizes pricing from home warranty providers I recommend depending on your plan and service fee selection. 

There are multiple factors that contribute to the cost of a home warranty plan. The following are the biggest factors that home warranty service providers will consider when determining plan pricing. 

• Location: Your home warranty provider may charge higher monthly premiums depending on its location compared to others. For example, if you live in Florida, you’ll likely pay more per month for home warranty coverage than someone living in Kansas. Florida’s climate and the prevalence and severity of issues like hurricanes and water damage influence the cost of home warranty plans in the state.
• Your service fee: You’ll pay your selected service fee each time you use your home warranty coverage. Choosing a higher service fee can reduce monthly premium costs because it limits your home warranty provider’s liability when you file a claim.
• Coverage limits: A coverage limit is the maximum your home warranty provider will pay to repair or replace each item. The higher your coverage limit the better, but you can expect to pay more per month for plans with higher coverage limits. 

How To Save Money on a Home Warranty

Taking steps to reduce the amount you pay for your home warranty plan can improve your overall household financial health. Use these tips to lower the price you pay per month when shopping for coverage. 

• Compare multiple providers: Get quotes from several home warranty providers and compare their coverage options and pricing. Don’t settle for the first offer you come across. With multiple quotes in hand, you can identify the one that offers the best combination of coverage and affordability.
• Choose the right plan: Assess your needs and prioritize coverage for the home systems and appliances that need it most. Choosing a more specific coverage plan can save you money. It’s better than a comprehensive plan with things you might not need. Plus, it still gives you peace of mind.
• Read and understand the contract: Before signing up for a home warranty plan, carefully read and understand the terms and conditions of the contract. Pay attention to coverage limitations, exclusions, and any restrictions that may impact your ability to make claims. By understanding the contract, you can be aware of potential costs and avoid unexpected expenses.
• Find specialized services: Some companies offer specialized warranty options tailored for veterans and military personnel. It’s a meaningful way to express gratitude and provide a secure and stress-free home environment for veterans and their families. If you fall into this category, these offers might help you save money.

How Do You Choose a Reliable Home Warranty Provider?

Choosing a reputable home warranty provider can be tough, especially when there are so many competing companies offering similar plans. Search for the following major features to make sure you’re working with a reputable provider:

• Positive customer feedback: Read customer reviews and testimonials about the home warranty provider before considering coverage options. Look for feedback on their responsiveness, professionalism, claim resolution process, and overall customer satisfaction. Online review platforms like the Better Business Bureau and Trustpilot can provide insights into the experiences of other homeowners.
• Clear terms, conditions, and limitations: Review each provider’s terms and conditions thoroughly. A reputable home warranty provider will have clear, easy-to-understand terms with minimal fine print. Pay attention to coverage limitations, exclusions, waiting periods, service fees, and any other important details outlined in each service contract.
• Transparent pricing: Reputable home warranty providers should have transparent pricing structures. They should clearly outline their coverage costs, service fees, deductibles, and any additional charges. Beware of providers that have hidden fees or unclear pricing structures.

I recommend you start your search with the home warranty companies below, known for their reliable service.

• Liberty Home Guard: With more than 40 add-on coverage choices, Liberty Home Guard is an ideal option for customized home warranty coverage. 
• American Home Shield: American Home Shield offers higher coverage limits than competing service providers, meaning that more expensive repairs and replacements are covered. 
• Select Home Warranty: Select Home Warranty is a great option if you’re looking for cheap home warranty coverage, with plans available from $60 per month in most areas. 

How Do You File a Claim With a Home Warranty Provider?

When it’s time to file a home warranty claim with your home warranty provider, it’s important to know what steps to take in advance so you are prepared when a breakdown occurs. While service requests’ procedures vary by home warranty company, expect to go through the following basic steps when using plan benefits. 

Step 1: Document the home system or appliance that’s not working properly. This may include taking photos of the unit itself or documenting the malfunctions using a smartphone camera. 

Step 2: Submit a claim to your home warranty provider as soon as you finish documenting the problem. Generally, you’ll do this online — but most home warranty providers also offer a 24/7 phone hotline you can use to connect with a representative.

Step 3: A home warranty representative will review your claim and compare it to your policy. If the repair or replacement is covered under the terms of your contract, your home warranty provider will follow up to schedule a repair. 

Step 4: Your home warranty representative will consult with the company’s network of local repair technicians to match you with someone available on your schedule. The home warranty company will usually book the appointment on your behalf, but some providers may allow you to choose your own service provider. 

Step 5: The home warranty company pays the bill directly, minus your service fee. 

Step 6: At your repair appointment, your technician will diagnose the issue and fix it for you. If they cannot fix the appliance or system at the appointment, they may need to return at a later date to complete the repair.

What Are the Pros and Cons of Having Home Warranty Coverage?

While a home warranty can provide peace of mind and more predictable repair costs, it may not be the best choice for everyone. Home warranties have limitations, for example, pre-existing conditions. I’ve outlined the pros and cons below. Check out our review of Pivotal Home Solutions to see an in-depth analysis of their coverage.

How Long Does Home Warranty Coverage Last?

Most home protection plan’s are in effect for 12 months from the date that your plans waiting period ends. Some home warranty plans allow you to purchase multiple years’ worth of home protection at a discount when you sign up for the first time. If your service contract doesn’t specify your coverage start and end dates, reach out to your service provider. 

So, What’s the Most Important Thing About Home Warranty Coverage?

The most important thing about home warranty coverage is understanding the specific home systems and appliances covered under your home warranty plan. Coverage will vary based on the company you choose. While most plans include general components, each home warranty company designs its own coverage options. It’s important to understand your coverage before committing.

When you explore home warranty coverage, be sure to thoroughly review your contract. This legally binding document outlines all the obligations your home warranty provider will fulfill. If you don’t see major appliances or home systems in your policy terms that you thought were covered, consult with a representative before buying. Get a quote from at least three competing home warranty companies like Liberty Home Guard and American Home Shield to be sure you’re not overpaying for coverage.