HOW MUCH DOES A HOME WARRANTY COST?
Vault’s Viewpoint on Home Warranty Cost
- Home warranties, technically service contracts, cover the costs of repairing or replacing certain appliances and home systems due to normal wear and tear.
- Home warranty costs range from $35 to $80 monthly (plus service call charges) and depend on the location, type of home, type of plan (what items are covered and not covered) and any add-ons like pools or spas.
- Before deciding on a home warranty, shop around, read the fine print and consider alternate options that may better fit your budget.
What Is a Home Warranty?
A home warranty is an annual service contract that helps cover the repair or replacement cost of covered appliances and home systems such as plumbing, electrical and HVAC.
With a home warranty, you pay a monthly fee plus an additional fee for each service call a technician makes to your home.
Home warranties are not the same as homeowners insurance, which covers the structure of your home and your possessions if they’re damaged or destroyed by covered events such as theft, fire or storms. Homeowners insurance won’t cover appliance or home system breakdowns, though, which is where home warranties come in. Generally, home warranties will list the specific items that are covered; for instance, kitchen appliances, washers and dryers, electrical and HVAC systems and garage door openers. Things that are not covered include floors, windows, doors and small and/or countertop appliances such as toaster ovens. They also do not cover solar panels, fireplaces or any damage that results from a natural disaster.
Home warranties also differ from a builder warranty, which is typically offered when purchasing a newly constructed home or an extensive remodel. Normally, builder warranties include different coverage lengths for specific components. For example, workmanship and materials for things such as paint, stucco and drywall are covered for one year, while HVAC, electrical and plumbing systems may be covered for two years. This type of warranty does not normally cost extra.
Home warranties are designed to help cover the cost of repairs or replacement of appliances and home systems that break down due to normal wear and tear. If you’re buying a new home, homeowners insurance is required by lenders, but a home warranty is not.
What Does a Home Warranty Cost?
The average monthly cost of a home warranty ranges from $35 to $80, but the cost may be higher depending on your location, the coverage you need and the plan you choose. Service call fees range from $75 to $125 per visit but can vary depending on the plan.
Some plans have lower monthly plan fees but higher service call fees and vice versa. If you have older appliances that may require numerous service calls, it may be worth considering a plan with a higher monthly premium but a lower service call fee.
Coverage limits for home warranties also vary depending on the plan. They generally range from $2,000 to $4,000, but a few plans offer higher limits for a higher monthly fee.
Some home warranty plans only cover appliances, while others only cover home systems; some offer coverage for both. Plans that cover only appliances or only home systems will cost less than plans that offer comprehensive coverage for both. Additional coverage can often be purchased for items not covered by any of the available plans.
The best way to determine precisely how much a home warranty will cost is to narrow down the items you need to be covered by the warranty and then get quotes from several home warranty companies that provide service in your area.
What Does a Home Warranty Cover?
Most home warranties cover the following:
- Kitchen appliances such as refrigerators, stoves, cooktops, ovens, dishwashers, garbage disposals and built-in microwaves
- Clothes washers and dryers
- Electrical, plumbing and HVAC systems
- Water heaters
- Garage door openers
- Ceiling and exhaust fans
- Septic systems
Home warranties don’t cover countertop appliances, structural features of your home like windows and doors and any appliance or home system not mentioned in the service contract. They also won’t cover poorly maintained items or breakdowns from misuse.
It’s important to read the home warranty contract thoroughly to understand what’s covered in your chosen plan. There’s usually a 30-day waiting period before the warranty coverage begins to guard the company against customers trying to use the coverage for pre-existing conditions.
Here are samples of the coverage offered by different plans from four top home warranty companies:
American Home Shield
- Shield Silver Plan: Covers heating, electrical and plumbing systems, with coverage up to $5,000 for heating and air conditioning systems
- Shield Gold Plan: Covers home systems (plus kitchen and laundry appliances), with up to $2,000 per appliance for repair or replacement
- Shield Platinum Plan: Covers home systems, kitchen and laundry appliances, roof leak repairs and free HVAC tuneup, with up to $4,000 for appliance repair or replacement
Liberty Home Guard
- Total Home Guard: Covers kitchen and laundry appliances, plumbing, electrical, HVAC systems and garage door openers
- Systems Guard: Covers plumbing, electrical, HVAC systems and water heaters
- Appliance Guard: Covers kitchen and laundry appliances, ceiling and exhaust fans and garage door openers
Select Home Warranty
- Gold Care: Covers plumbing, electrical, HVAC systems, water heaters and ductwork
- Platinum Care: Covers plumbing, electrical, HVAC systems, water heaters, ductwork and kitchen and laundry appliances
- Bronze Care: Covers kitchen and laundry appliances
AFC Home Warranty
- Diamond Plan: Covers plumbing, electrical, HVAC systems, kitchen and laundry appliances, water heaters, ductwork, fans, electronics and exterior sewer and water lines
- Platinum Plan: Covers plumbing, electrical, HVAC systems, kitchen and laundry appliances, ductwork, water heaters and fans
- Gold Plan: Covers plumbing, electrical, HVAC systems, kitchen and laundry appliances, water heaters and ductwork
What Determines the Cost of a Home Warranty?
There are several factors that determine the cost of a home warranty. These include:
- The type of plan: The best home warranty companies offer several plans with different types of coverage. The least comprehensive coverage will be the least expensive plan, while top-tier plans that offer comprehensive coverage for appliances and home systems will be the most expensive.
- Service fee: The service fee is the amount you’ll pay each time a technician visits your home to make a repair. Higher-priced plans often have lower service call fees, while more basic, less costly plans may have higher service fees.
- Location: Regions with a high cost of living often have higher repair costs. Home warranty companies usually consider this when pricing plans in different areas, so the same plan won’t necessarily cost the same amount in every part of the country.
- Type of home: The type of home you live in, such as single-family, duplex, townhouse or condo, may affect the cost of a home warranty. The size of your home, especially if it’s larger than 5,000 square feet, may also factor into the cost.
- Additional coverage: Most home warranty companies offer add-on coverage for items not covered in the plans. This may include pools and spas, water softeners and even electronics. The price of a home warranty will vary depending on the additional coverage you purchase.
How To Save Money on a Home Warranty
There are several ways to save money when purchasing a home warranty.
Get Quotes From Several Home Warranty Companies
While the coverage offered by different home warranty companies may seem similar, prices, coverage limits and service fee costs can differ significantly. Before you choose a plan, it pays to get quotes from at least three different home warranty companies, either online or by phone.
Buy Only the Coverage You Need
You may not necessarily need a home warranty with comprehensive coverage for all appliances and home systems. For example, if you recently purchased new kitchen appliances, they may still be covered under the manufacturer’s warranty. Determine which appliances and home systems you need coverage before deciding on a warranty plan to ensure you’re not paying for duplicate coverage.
Choose a Higher Service Fee to Lower Your Monthly Payment
Choosing a higher service fee will lower your monthly payment, but you’ll pay more for each service call when you need a technician visit. This option is worth considering if you have newer appliances and home systems that may require few service calls.
Ask About Discounts
Many home warranty companies will offer a discount for paying for a plan yearly rather than monthly. The cost savings can be considerable if you can afford to pay the full amount upfront. Ask about any other discounts the company may offer, as companies sometimes offer specials throughout the year that can save you money.
Frequently Asked Questions
What Are the Cons of a Home Warranty?
Home warranties set limits (which vary greatly between companies) on the dollar amount they will pay per service, item or even yearly. They can also deny a claim if they think something has not been appropriately maintained (an excellent reason to always save your receipts). If they do approve the claim, they maintain the discretion on whether they will replace that item or repair it. When replacing; they could decide on a cheaper model; there usually isn’t any stipulation that they provide you with something of comparable value—or aesthetic.
What Is the Biggest Benefit of a Home Warranty?
A home warranty could potentially benefit someone purchasing an older home when there are likely few maintenance records. The most significant benefit, though, would be the reduced risk of having to foot the total (and unexpected) cost of a big-budget item.
What Are Some Alternatives to a Home Warranty?
Some people prefer to simply maintain a separate savings account to cover any large unexpected repairs. Many insurance companies that provide homeowners’ policies offer an optional, additional endorsement called “equipment breakdown coverage.” This kind of coverage typically includes HVAC equipment, solar panels, computers, kitchen appliances and emergency generators. These endorsements usually cost between $25 and $50 a year.
Newsweek writer Vanessa Nirode contributed to this post.
The post How Much Does a Home Warranty Cost? first appeared on Newsweek Vault.
2024-06-28T18:43:06Z dg43tfdfdgfd
