How much does a home warranty cost?

How much is a home warranty?

The average cost of a home warranty ranges between $450 and $600 per year. Home warranties are typically 12-month contracts, and many providers let you pay monthly or annually. The average monthly cost is between $40 and $60.

There are other costs to think about, though; home warranty companies charge service call fees each time a contracted technician is sent to your home. You can think about a service call fee like a deductible or a copay. Most service fees range from $75 to $150.

When considering the cost of your home warranty, factor in your monthly or annual payment as well as the service call fee.

Most providers offer a repair guarantee so you aren’t charged a service call fee more than once during a specified period if a repair isn’t successful and a contractor has to return. Look for language in a contract about the length of this period (usually 30 to 60 days).

Summary of home warranty costs

• Total plan cost: $450 to $600 per year
• Average monthly payment: $40 to $60
• Service call fees: $75 to $150 per visit

Home warranty coverage limits

Home warranty contracts have exclusions and coverage limits for individual items; you may have to pay for repairs if you’ve reached the maximum coverage limit of your policy or if the breakdown is due to an item that's listed as an exclusion in your contract.

For example, say your refrigerator breaks down. It costs $2,000 to replace it, but your home warranty has a $1,500 coverage limit for refrigerator repair or replacement. In this case, the provider pays the contractor $1,500, and you’re responsible for the remaining $500. Sometimes the company may pay you $1,500 directly and require proof of the appliance being replaced.

» LEARN: What does a home warranty cover?

Home warranty price comparison 

When you’re picking the right home warranty service plan for you, cost is a big factor. The chart below presents some average figures to consider before you choose a company.

Are home warranties worth it?

For many homeowners, home warranties are worth it because they provide financial security against expensive out-of-pocket appliance and system repair costs.

Without a home warranty, the homeowner is responsible for the cost of repair or replacement when the refrigerator, water heater or air conditioner breaks down and is no longer covered by the manufacturer. For those who don’t have the savings to cover these costly repairs, a home warranty can be a worthwhile investment — often it pays for itself with one big repair or replacement or a series of smaller ones.

On the other hand, it’s possible to buy a home warranty and never use it. This is why it’s essential to understand what your home warranty covers by carefully reading the service contract before purchase. You don’t want to skip over the fine print only to find out later, after an appliance or system breakdown, that an urgent repair isn’t covered.

A reviewer from Texas on our site was disappointed to learn this the hard way.

"While one component was covered, some of the other crucial components of the garage door system were not covered and we had to pay full price to have those repaired/replaced," the said. "I guess I should have read the fine print on the [terms and conditions] more carefully.”

It’s more likely a home warranty will be worth it if you take inventory of your major appliances and systems (their age, whether they’re covered by the manufacturer, etc.) before signing on. Research the cost of repair or replacement both with and without a warranty to determine the chances of it being worth it.

» MORE: Is a home warranty worth it?

Also, keep in mind that this coverage isn’t the same as homeowners insurance, which covers the structure of your home and the contents inside against risks like fire, storms, vandalism and theft. This type of coverage is required if you have a mortgage, while a home warranty is an optional, added layer of protection.

How much can you save on home repair costs?

To determine how much you can save with a home warranty, estimate the cost of repairing or replacing your appliances and systems and compare that with the annual cost of a home warranty plan (plus the service fee for each claim). Here are some steps to follow:

1. Make a list of your appliances and systems. Include how old they are, if they’re still under the manufacturer's warranty and their current condition. (If an item is more than 2 years old, it’s probably no longer under a standard warranty.)
2. Determine which appliances and systems are at risk of a breakdown and would hurt your wallet to replace. Generally, these are appliances or systems not under a manufacturer's warranty and are:
   • Older appliances (more than 8 years old)
   • Expensive to replace (e.g., the price to replace an HVAC system is usually at least $5,000)
   • Necessary to live comfortably (like a water heater)
3. Estimate the cost of repair or replacement of all your at-risk items using the chart below.
4. Compare these costs with the cost of a home warranty plan. The difference between the cost of repairs and replacements and the cost of a plan is the amount of money you can potentially save. Don’t forget to factor in coverage limits and service call fees.

Remember that a home warranty will not cover preexisting breakdowns, and there’s usually a waiting period of 30 days before you can make a claim.

Pros and cons of home warranties

The most obvious benefit of a home warranty is the potential to save hundreds of dollars on repairs and replacements. But these contracts also provide convenience; when a covered item breaks down, just go online or call to file a claim, and then the company finds a licensed contractor to send to your home. Many companies also guarantee the quality of the repairs.

A home warranty can easily pay for itself the first time you use it for a major repair. On the other hand, many people who pay for home warranties end up not using them.

It’s also important to consider the limitations and exclusions of the warranty contract, including payout caps and excluded components of covered items. A home warranty company will deny a claim if the breakdown isn’t covered under the terms of the contract. And keep in mind that you can’t pick your own contractor to make repairs (though some companies offer exceptions to this rule).