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 Are Home Warranties Worth It?

Are Home Warranties Worth It?

When you purchase a home, you may be offered a home warranty as a safety net against expensive, unforeseen repairs. But are home warranties really worth it?

Owning or renting a home inevitably involves dealing with repairs and maintenance issues, from malfunctioning appliances to leaky faucets and HVAC breakdowns. To help alleviate the financial burden of these common home repairs, some people opt for home warranties. But are home warranties truly beneficial for both homeowners and renters? In this article, we’ll explore what home warranties entail, when they are worth considering, and what the best home warranty companies offer.

What is a Home Warranty?

A home warranty is a contract that provides coverage for repairs or replacements of major appliances and home systems. The coverage is typically limited to wear and tear, and there are often exclusions for certain items.

Home warranties are typically sold by third-party companies, and they can be purchased for a one-year or multi-year term. The cost of a home warranty varies depending on the company, the coverage level, and the age of your home.

What is Covered by a Home Warranty?

The coverage offered by home warranties varies from company to company, but most plans cover major appliances like refrigerators, stoves, and dishwashers. Some plans also cover home systems like HVAC units, water heaters, and furnaces.

When is a Home Warranty Worth It?

Home warranties can be a good option for homeowners who want peace of mind and don’t want to be surprised by unexpected repair costs. They can also be a good option for homeowners who don’t have a lot of savings to cover major repairs.

However, home warranties are not always the best option. If you have a new home, you may already have coverage for some of the major appliances and systems through the manufacturer’s warranty. And if you have a lot of savings, you may be able to afford to pay for repairs out of pocket.

Pros and Cons of Home Warranties


  • Peace of mind for those with used appliances and older home systems.
  • Convenient access to a network of trusted professionals provided by the home warranty company, saving time on researching repair technicians.
  • No need for DIY skills or tools.
  • Relatively affordable, with average monthly fees below $100.


  • Coverage limits per repair or per year may restrict claims.
  • Service call fees are incurred for each incident, ranging from $50 to $75.
  • Claims can be denied if items haven’t been adequately maintained, requiring proof of maintenance.
  • Less control over whether systems are fixed or replaced, determined by the home warranty companies.
  • The possibility of never using the warranty, resulting in an opportunity cost.

Alternatives to Home Warranties

There are a few alternatives to home warranties that you may want to consider. One option is to build up an emergency fund that you can use to cover unexpected repair costs. Another option is to purchase homeowners insurance with extended coverage for appliances and systems.

While home warranties provide protection for home systems and appliances, they often come with limitations, exclusions, or high deductibles. Homeowners should also consider alternatives, such as building an emergency fund to cover unexpected expenses related to home systems. Creating a dedicated savings account or adhering to a budget can help prepare for such financial hits.


In conclusion, home warranties can offer valuable protection for homeowners and renters alike, especially when coupled with appropriate homeowners’ insurance. They provide peace of mind and convenience for addressing repair needs. However, before investing in a home warranty, it’s essential to assess whether your newly acquired home or its components are already covered by existing warranties. Understanding the coverage and limitations of home warranties will help you make an informed decision about whether they are worth the investment for your specific circumstances.

Home warranties can be a good option for some homeowners, but they’re not the right choice for everyone. If you’re considering purchasing a home warranty, be sure to weigh the pros and cons carefully before making a decision.

Here are some additional tips for homeowners considering a home warranty:

  • Read the fine print: Be sure to read the terms and conditions of the home warranty carefully before purchasing it. Make sure you understand what is covered and what is not covered.
  • Compare quotes: Get quotes from several different home warranty companies before making a decision. This will help you find the best coverage for your needs and budget.
  • Ask about exclusions: Be sure to ask about any exclusions that may apply to your home warranty. This will help you avoid surprises down the road.

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