Home Warranty Cost Guide

June 11, 2023

man crunching numbers on a calculator at a desk with a home icon

*Updated February 24th, 2025

Home repairs always seem to happen at the worst times. One day, your HVAC system is running smoothly, and the next, you’re stuck with no heat in the middle of winter or a fridge that suddenly stops cooling. That’s where a home warranty can help—by covering the repair or replacement costs of major home systems and appliances due to normal wear and tear.

Unlike homeowners insurance, which protects against unexpected disasters like fires or floods, a home warranty is a service contract that helps cover the cost of breakdowns from everyday use. Whether it’s your plumbing, electrical system, or kitchen appliances, a home warranty can save you from expensive out-of-pocket repair costs and the stress of finding a reliable technician.

But before signing up for a plan, it’s important to understand how much a home warranty costs and what factors influence pricing. Costs can vary based on coverage options, provider, and home size, so knowing what to expect will help you find the best plan for your needs and budget. In this guide, we’ll break down everything you need to know about home warranty pricing, so you can make an informed decision and protect your home without overspending.

What is a Home Warranty?

A home warranty provides financial protection for your home’s appliances and systems. It covers some of the cost of repairing your appliances or systems if they break down from normal wear and tear.

A home warranty isn’t insurance. It doesn’t protect your appliances and systems from major issues like tornadoes, flooding, or fire. Instead, they cover appliances or systems when they break down after regular use and proper maintenance.

For example, if you maintain your HVAC system annually and use it as directed by the manufacturer and it stops working, your home warranty may cover some of the cost to repair it.

How Home Warranties Work

Each home warranty company offers different coverage options, but most coverages work the same.

You pay a premium annually for the coverage, and the company covers the named appliances and systems under the terms and conditions they’ve supplied.

Each warranty company has different requirements, including how to maintain and/or use the items. They may also limit the reasons they’ll cover a repair. For example, if they determine you didn’t maintain your dishwasher as required, and the repair could have been prevented, they may deny the claim.

Of course, this isn’t the point of home warranties, but you should read the fine print to know what is and isn’t covered.

In addition, consider which appliances and systems the warranty will cover. For example, don’t assume they’ll cover every appliance, especially if you have several of the same type of appliance in your home.

If you have a valid claim, you file it with the warranty company according to their procedures, either online or over the phone, and wait for a repair company to visit your home.

Warranty companies work with local repair companies to handle your appliance and system repairs. The warranty company oversees who comes to your home and schedules the appointment. You’re on the warranty company’s timeline, so be sure you know how they operate.

What’s Typically Covered on a Home Warranty?

Understanding what a home warranty covers is key to getting the most value out of your plan. While most providers offer similar coverage, the specific details can vary, so it’s always a good idea to read the fine print and ask questions before committing.

Home warranties generally cover major home systems and appliances, but not everything is included. Coverage depends on the type of plan you choose—some focus solely on appliances, others cover home systems like plumbing and electrical, and comprehensive plans offer protection for both.

Additionally, most warranties have exclusions and limitations, so things like improper maintenance or pre-existing issues may not be covered. Before purchasing a plan, be sure to check which items are included, what’s excluded, and any coverage limits that may apply.

Here’s a look at what’s typically covered:

  • Appliances – Refrigerators, ovens, dishwashers, built-in microwaves, garbage disposals
  • Home Systems – HVAC, plumbing, electrical, ductwork, furnaces, air conditioners
  • Other Components – Garage door openers, water heaters

While a home warranty won’t cover every breakdown, it can help offset the cost of repairs or replacements when covered items stop working due to normal wear and tear. That’s why choosing the right coverage for your needs is essential!

A Breakdown of the Home Warranty Cost

The home warranty cost is an essential factor when considering a home warranty. You’ll pay a premium no matter where you buy your policy, but you’ll also be on the hook for service fees and potential add-ons.

When deciding which home warranty to purchase, consider how you’ll pay the premiums. Most companies require you to pay home warranty premiums annually (once a year). However, you may request a monthly premium if you need to break up the cost. Most companies charge a small convenience fee for this option, increasing your cost slightly.

Premium

The cost you pay to buy the warranty protection is the premium. The average policy costs $350 to $600 but can vary considerably.

The cost depends on what you cover, such as home appliances, systems, or both. For example, if you cover only home appliances, the policy may cost less than if you cover appliances and systems.

You pay the premium to purchase the policy, no matter if you use it. For example, say you pay $600 for a home warranty, and nothing breaks down in that year. You don’t get the $600 back – it’s the cost of covering your home.

Again, if you can’t afford the premium in one lump sum, you may request to break it up into monthly payments. Talk to the home warranty companies you’re considering to see if that’s an option.

Service Fees

Service fees are the costs you pay when you need a repair. For example, if your refrigerator stops working, you’d pay a service fee for the repair person to assess the issue.

Every home warranty company differs, but expect to pay $50 to $150 for each service call. Understand the fine print to determine what the company charges and if different repairs have different service fees.

Also, pay attention to the company’s limits or caps. For example, if they have a cap of $5,000 annually and your repairs exceed that amount, you’ll be on the hook for the service fee plus any excess costs above the $5,000 limit.

Add-Ons

Like insurance, home warranties have add-ons. Each add-on has its own cost, terms, and conditions. Depending on the coverage, the add-ons can be a few dollars to $40 each.

For example, common add-ons include coverage for a swimming pool, hot tub, roof leaks, or septic tank coverage.

How Long Does a Home Warranty Last?

Most home warranties last for one year, so the premium you pay is for 12 months starting the date you purchase it. However, keep in mind that each policy has a waiting period. So although you purchased coverage for 12 months, it might only be effective for 11, depending on the waiting period.

Most warranty companies allow you to renew coverage, and some may offer the option to prepay for a few years at a time. It varies by company.

Determining if a Home Warranty Cost is Worth It

So how do you determine if the home warranty cost is worth it?

It requires estimating what you expect to repair, but here’s how it works.

Take the total premium cost and estimate the number of claims you might have. Of course, you know your house best and the condition of your appliances and systems. If you aren’t sure what to expect, use an estimate of a couple of claims per year.

Multiply the number of claims you expect by the service fee. So, for example, if you expect 5 claims and the service fee is $100, that’s $500 plus the premium, which, let’s say, was $650.

In total, you’d pay $1,150 for the year for the warranty coverage. Now compare that cost to the average cost of the expected repairs in your area to see if you’d save money.

As a couple of examples, here are some average costs:

  • Refrigerator repairs – $200 – $1,000
  • HVAC repairs – $100 – $600, plus hourly rates of $50 to $100 per hour

Comparing what you expect to what it might cost can give you a good idea if the warranty is worth it.

Reasons to Consider a Home Warranty

Now that you have an idea of home warranty costs, you might be wondering—is it really worth it? A home warranty isn’t required, but for many homeowners, it provides peace of mind, financial protection, and convenience.

If you’re on the fence, here are some of the biggest reasons to consider getting a home warranty.

1. Protect Expensive Appliances

Let’s face it—high-end appliances come with high-end repair costs. If you’ve invested in a top-of-the-line refrigerator, stove, or washer and dryer, a home warranty can help cover expensive repairs when they break down.

Even well-maintained appliances wear out over time, and replacement parts for premium brands can be costly. A home warranty helps cover those expenses, so you’re not stuck with a big repair bill when an appliance unexpectedly stops working.

2. You Aren’t Sure About the Home’s Condition

Buying an existing home? You might not have a complete history of how well the previous owner maintained major systems and appliances. Even with a home inspection, there could be hidden issues that don’t show up right away.

A home warranty can provide a safety net in case a furnace, water heater, or electrical system fails shortly after you move in. It’s especially helpful if your new home has older appliances or systems that are more likely to break down.

3. Home System Repairs can be Expensive

Your home’s major systems—HVAC, plumbing, and electrical—are some of the most expensive to repair. A home warranty can help offset costs for unexpected breakdowns, saving you hundreds or even thousands of dollars.

For example:

  • A new furnace can cost $3,000–$7,000 to replace.
  • A water heater replacement can run $800–$2,500.
  • Major HVAC repairs often start at $500 and go up from there.

With a home warranty, you’ll only pay the service fee, and the warranty provider covers the rest (as long as the issue is included in your plan).

4. Time Savings

Let’s be honest—finding a reliable repair technician can be a hassle. When something breaks, you have to research contractors, get quotes, and hope you’re not overpaying.

  • You don’t have to hunt for a contractor—the warranty company handles it.
  • You won’t stress over repair costs—you’ll only pay the set service fee.
  • It’s a one-call solution—just file a claim, and they take care of the rest.

If you don’t have the time or patience to deal with unexpected home repairs, a home warranty makes life easier.

Final Thoughts

A home warranty can be a great safety net, helping you avoid costly repair bills when major home systems or appliances break down. But like any investment, it’s important to understand the full cost before signing up. You’ll need to consider not just the monthly or annual premium, but also service fees for each repair call and any potential coverage limitations.

Finding the right home warranty means striking a balance between affordable pricing and solid coverage. The cheapest plan may not cover everything you need, while a premium plan might include extras you’ll never use. That’s why it’s worth comparing multiple providers, reading the fine print, and making sure the plan fits your budget and home maintenance needs.

At the end of the day, a home warranty should provide peace of mind, knowing you won’t be caught off guard by expensive repairs. If you do your homework and choose wisely, you can enjoy financial protection, convenience, and fewer home repair headaches.

FAQ

Does a home warranty cover accidental damage?

Home warranties usually only cover damage from normal use or wear/tear. They don’t cover accidental damage. Only homeowner’s insurance covers accidental damage like fire, weather, or vandalism.

What is a warranty fee?

The warranty fee is the cost of purchasing the warranty or financial protection of your appliances or home systems. Another word for the fee is premium; you’ll pay it annually for coverage.

Is a home warranty a write-off?

A home warranty isn’t a typical tax write-off. However, if you operate a business in your home, you may be able to deduct a portion of the warranty’s cost.

Additional Home Warranty Resources