The cost of a home warranty goes beyond the monthly payment. It has to do with the overall value you get from the plan. To determine whether a home warranty is worth the cost, you need to consider more than price. Think about service fees, coverage limits, and what’s actually included.
Here’s what you need to know about the actual cost of a home warranty.
What is the average cost of a home warranty?
Home warranty plans typically cost between $43 and $67 per month, according to estimates collected by the USA TODAY team from 20 major providers. If you’re looking for the most budget-friendly option, appliance-only or system-only plans typically fall in the $30 to $40 per month range. Full-coverage combination plans cost more, often between $65 and $100 per month.
Home warranty costs based on provider
Home warranty plans from home warranty providers cost between $35 and $100 per month, but most plans fall in the $40 per month range.
Companies like American Home Shield offer affordable basic coverage for systems and appliances, but more comprehensive plans cost much more. With other home warranty companies, such as Select Home Warranty, there is little difference in system-only or appliance-only coverage, so we recommend choosing the highest level.
Typical service call charges are about $75 per claim, but some companies, such as Cinch Home Services, can charge twice that amount.
Factors that affect home warranty costs
Many factors affect the cost of a home warranty, and “prices vary widely depending on the type of warranty you choose and how much coverage you actually want,” says Kristen Conti, broker and owner of Peacock Premier Properties in Englewood, Florida. “Additionally, the price will be adjusted based on how much you are willing to pay for each event and whether there is a deductible,” she added.
coverage level
The more coverage you have, the more expensive your plan will be. Basic plans that cover only appliances or systems are the most affordable, while combo plans that cover both are more expensive.
Service fee
Typically, the higher the service fee (the fee you pay when you file a claim and have a technician sent to your home), the lower your monthly costs will be. Many home warranty providers offer the option of lower service call rates, but this will likely result in higher monthly charges.
add on
Add-ons are optional coverage for individual items, such as roof leak protection or pool/spa equipment. Many add-ons cost an additional $10 to $30 per month, but some providers offer coverage for as little as $5 depending on the additional items. Add-ons can be added quickly, so choose only the additional coverage you need.
your location
Location can affect the cost of your plan, especially if you live in an area where repairs are expensive. In areas where labor costs are high and parts prices are high, repair costs also tend to be high. If your area is known for extreme weather or frequent system outages, your provider may also adjust rates to account for the increased risk.
home size
Home warranty providers may charge higher rates for larger homes, especially those over 5,000 square feet. This is because larger homes require more appliances to cover and larger systems to run.
Appliance and system types
Plans that include high-end luxury appliances usually cost more than basic coverage, but that’s if your home warranty company offers coverage for those types of appliances.
hidden home warranty costs
Monthly payments are not the only home warranty costs to be aware of. Other costs can increase the annual price, such as:
- Service fee: Expect to pay a service call fee (usually between $65 and $125 per visit) each time you schedule a repair.
- Upper limit of coverage: Most plans limit the amount you pay per item or per year. If the repair exceeds that limit, you will be responsible for the difference. Many home warranty providers have coverage limits of $1,000 to $3,000 per system and appliance, but overall limits total between $5,000 and $10,000.
- Maintenance requirements: Some providers may require proof of regular maintenance. Regular maintenance is a good habit every homeowner should engage in, but it comes at a cost.
Home Warranty Cost and Value
The obvious value of a home warranty is that it covers the cost of expensive home repairs in the event of an unexpected breakdown. “Depending on the issue at hand, the savings can be significant. I’ve seen plumbing and electrical issues covered by thousands of dollars,” says Conti. AC systems are another area where homeowners can see significant savings. A single repair or replacement can “easily cost over $1,000, so the annual cost of a warranty dwarfs that,” she says.
A home warranty will pay for itself in one repair, as long as you don’t pay too much in premiums. And as Conti experienced with a recent client, the items that lead to repayment can surprise you.
The luxury home I work with had a very expensive ice maker. It disappeared during the vehicle inspection period. The customer opted for a home warranty during the listing period, so the company replaced the entire machine.
Value isn’t just about expensive products, it’s also about convenience. Warranties simplify the repair process and save you both time and stress. Instead of finding a contractor, getting multiple bids, and negotiating prices, make one call and pay a set fee for your services. For busy homeowners, the simplicity alone is worth the cost.
How to save money with a home warranty
Most home warranties come with affordable monthly payments, but there are ways to get the most out of your warranty (and save the most money).
- Pay only for the coverage you need. If you recently renovated your kitchen and all your appliances are new, you may not need appliance coverage. In this case, you can save money by going for a system-only plan.
- Get quotes from at least three home warranty companies. Prices vary by home warranty provider, so get quotes from at least three reputable providers and compare coverage before signing.
- Choose a higher service fee (you can also choose a lower service fee if you prefer). Typically, the higher the service call rate, the lower the monthly fee, and vice versa. If you expect to need your home warranty only once or twice a year, a lower monthly fee may be worth the slightly higher call charges. However, if you expect to make many claims, we recommend choosing a lower service call rate to save money on all your claims.
- Avoid add-ons. You may want to add all your appliances and systems to your protection plan, but this method will increase your monthly payments. Most importantly, add additional protection only when necessary.
- Choose a provider with higher coverage limits. Home warranties are only valuable if repairs are paid for, so make sure your coverage limits are high enough to cover average repair costs in your area. If not, you will have to pay the difference out of pocket.
FAQ
When is the best time to buy a home warranty?
The best time to purchase a home warranty is when you move into a new home. Since you may not know the history of your home, it’s reassuring to know that if something breaks due to normal wear and tear, the warranty will cover the cost of repairing it.
By when can I receive my home warranty?
You can purchase a home warranty at any time, but keep in mind that many providers have a 30-day waiting period during which you cannot make a claim. If your system or appliance breaks down during this time, you will not be covered.
Who has the best home warranty coverage?
American Home Shield, Select HomeWarranty, and Liberty Home Guard are known for offering quality home warranties.
