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5 min read Feb 20, 2024

Home Warranty Cost: Everything You Need to Know

Edited By

Megha Mulchandani

Edited By

Megha Mulchandani

Editor, Houzeo

Megha M. is a content editor who loves to play with words. Apart from this, she is a theater artist and a public speaker who transforms into various personas on stage.

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The average home warranty cost falls around $500. A home warranty is an annual contract that covers major system and appliances repair and replacement costs. Because of this, the cost may vary according to the coverage.

It is an additional service that secures your appliances. However, 3% to 4% of homes in America opt for a home warranty. Where two-thirds of home warranties are sold in conjunction, which provides long-term benefits to the buyer.

🔍 Home Warranty Cost overview

  • The most expensive plan can range up to $1,400 and lowest you can avail it for $300.
  • You can save a significant amount on repairs, as home warramty covers most of the basic maintenance costs.
  • If the appliances or systems exceed the repair budget, the expense is not included in the home warranty.

How Much Does a Home Warranty Cost?

A home warranty cost depends on various factors, such as the property’s age, systems covered in the contract, service fee, location, and warranty provider. The average cost of a home warranty is around $500 per year, and can further increase as per the plan.

In addition, you have to pay a service fee whenever the technician visits for the service. The service fees range from $60 to $150, depending on your plan. This is applicable only if you opt for a yearly fee plan.

A home warranty generally covers system repair and maintenance costs. If some part of your home is not covered, you must opt for optional add-ons, which can cost you a few dollars to $40 or more. Here’s a list of common repair costs.

Common IssuesCost
Electrical Issues$200 to $500
Leaky Faucet$270
HVAC Issues$150 to $620
Dishwasher Repairs$200
Roof Repairs$950

What Is Not Covered in the Home Warranty?

Companies maintain a standard that states the eligibility of appliances and systems in the home warranty. Most of the home warranty plans don’t include:

  • Windows
  • Walls
  • Floors
  • Sprinkler systems
  • Property’s exterior
  • Old appliances
  • Poorly maintained appliances
  • Incorrectly installed systems

Factors That Affect Home Warranty Cost

Here are the factors that affect home warranty costs:

  1. Property Age: Older homes bear more damage and system failure. Because of this, companies provide fewer discounts. Whereas, homes that are less than 10 years old get more discounts.
  2. Location: Warranty costs are higher in rural areas, as companies offer more negotiable rates in large metropolitan areas.
  3. Property Size: Larger homes cost more than smaller ones, and an expensive policy covers all the major parts of the home.
  4. Plan Cost: Companies offer multiple plans, and they will try to sell the most expensive one. The basic plans cover system failures, whereas the expensive ones cover routine maintenance and repairs.

Average Cost of Top Home Warranty Companies

Here are the average costs of top home warranty companies:

Home Warranty CompanyCost Per MonthService Fee
American Home Shield$39.99 $100 to $125
Choice Home Warranty$45$60 to $85
America’s 1st Choice Home Club$39.99$75 to $100
First American Home Warranty$25 to $40$75 to $100
Select Home Warranty$35 to $60$60 to $75

Benefits of Home Warranties

Here are some benefits of a home warranty:

  • Savings: The average home warranty cost is between $500 and $600 annually. If you use the service more than twice a year, you might make the most of it.
  • Streamlined Services: The company is responsible for looking for contractors and repair shops. This makes your task easy and you can avail of their services smoothly.
  • Customizable Coverage: You can customize the coverage according to your needs, and the budget will be adjusted in the plan. This will give you assurance for most of the appliances and systems.

Potential Drawbacks of Home Warranties

With many benefits, a home warranty has some drawbacks you should be aware of.

  • Additional Monthly Bill: Home warranty prices can be expensive if you have a tight budget. The average monthly cost is around $50 and can be heavy on your pocket.
  • Repair Costs: Most companies have a set margin for repair costs. In conditions where you require a major repair and it exceeds the repair costs, you may have to bear the additional expenses.
  • Claim Approval: Companies have a fixed set of standards to approve the claim. They may deny your approval if your repairs are beyond the standards, like old, misused, or damaged appliances.
    ✍️ Note: The homeowner still have to pay service fee, if the claim is denied, as the repairs person visited to assess the claim

Other Alternatives for Home Warranty

If you find home warranties expensive, you can opt for some other options:

  • Repair It When Needed: You can opt for DIY repairs if there are any minor breakdowns. In case, the appliances or system needs major repair, you can call a specialist for it.
  • Insurance: Home insurance will mostly cover the damage caused because of theft or natural disasters.

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Bottom Line

Home warranty costs can add to your monthly expenses, but they can save a significant amount on major appliances and system repairs. If you are not aware of the condition of your home appliances and systems, you can hire a home inspector to prepare a report.

Houzeo can help you with that. With the “pros” feature on Houzeo, you can find the best home inspector in your local area. You can swiftly book an appointment and proceed with your home inspection.

» Need More Clarity? Read these exclusive Houzeo reviews and learn why the platform is the best in America’s competitive housing market.

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Frequently Asked Questions

Am I required to have a home warranty?

No, you are not required to have a home warranty. It is optional, and the decision to purchase one depends on your personal preference and budget.

How much does a home warranty cost per month?

The cost of a home warranty per month typically ranges from $25 to $80 but can vary depending on several factors such as coverage level, provider, and home location.

How does $500 in home warranty work?

Generally, a home warranty covers the repair or replacement of specific appliances and systems when you buy a home.

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