Owning a home can be expensive. Between monthly bills, property taxes, and the various repairs that may be necessary, it can be challenging to budget for emergencies and other big-ticket items that may be required. In these situations, a home warranty can be valuable.
A home warranty is a service contract that helps homeowners cover the costs of repairs to home systems and major appliances, such as furnaces, washers and dryers, and HVAC units, that may break down unexpectedly.
Typically offered as an incentive by sellers to buyers in a home sale transaction, homeowners can also purchase home warranties to cover their home. They can be an important way to guard against the high costs of homeownership in areas not always covered by homeowners insurance.
In this guide:
- Best Home Warranty Companies
- How Much Does a Home Warranty Cost?
- Do You Need a Home Warranty?
- What to Look for in a Home Warranty Company
LendEDU’s 5 Best Home Warranty Companies
While there are numerous home warranty plans out there, some offer more benefits than others. Here are five of the best home warranty companies often used by consumers.
1) The Home Service Club
The Home Service Club was created with the goal of providing next-level customer service to home warranty customers, and it is highly regarded by industry experts.
Here’s what you need to know about The Home Service Club.
- LendEDU Rating: 5.00
- BBB Rating: N/A
- Comprehensive coverage: This includes coverage both for appliances and for 33 systems in your home including: air conditioning systems, heating systems, duct work, plumbing, hot water pump recirculating systems, gas leaks, water leaks, sump pumps, water heaters, electrical systems, whole house fans, exhaust fans, attic fans, ceiling fans, central vacs, and much more. Optional add-ons include coverage for sprinkler systems, freestanding fridges, jetted bathtubs, roof coverage, and pool or spa equipment.
- Standard coverage: Standard plans cover 18 essential systems as well as appliances. The 18 covered systems include: AC and heating systems, plumbing systems, water leaks, water heaters, electrical systems, ceiling fans, central vacuums, garbage disposals, and garage door openers.
- Real estate home warranty plans: Home buyers also have the option to obtain basic, standard, or comprehensive coverage. Basic coverage provides home protection for only the most essential systems, including: A/C and heat, ductwork, plumbing, water heaters, electrical systems, and plumbing stoppage coverage.
Service fees for plans from The Home Service Club range in price.
2) AFC Home Club
Americas 1st Choice Home Club (AFC Home Club) was founded with the goal of providing affordable protection against the high costs of home repairs. The founders are service-oriented and it shows—AFC Home Club has a good Better Business Bureau rating relative to competitors and was named a 2018 Inc. 5000 Company.
Here’s what you need to know about home warranties provided by AFC Home Club.
- LendEDU Rating: 4.12
- BBB Rating: B
- The Platinum Plan: This covers air conditioning and heating systems, water heaters, electrical systems, plumbing, plumbing stoppages, ductwork, and appliances including washers and dryers, kitchen refrigerators, ice makers, ovens, ranges, stoves or cooktops, dishwashers, garbage disposals, garage door openers, and built-in microwaves.
- The Gold Plan: This plan is a step down from the Platinum Plan. It covers everything the platinum plan does except for plumbing stoppages, built-in microwaves, and icemakers.
- The Silver Plan: The Silver Plan is far less comprehensive than the Platinum or Gold Plan. It does not cover any home systems, including air conditioning, heating, or plumbing. It does cover all appliances the more comprehensive plans cover, but not built-in microwaves or ice makers.
- The System Plan: This plan covers all home systems of the Platinum or Gold Plan except for plumbing stoppages. However, it provides no coverage at all for any appliances.
AFC Home Club may charge service fees.
3) Choice Home
Choice Home Warranty promises comprehensive protection against the high costs of repair or replacement when things go wrong at home. Choice Home indicates that claimants have a dedicated team of just two or three representatives that are available throughout the entirety of the claims process. The company offers many benefits, including a free first month when you buy a single home warranty.
Here is what you need to know about warranties through Choice Home:
- LendEDU Rating: 3.88
- BBB Rating: B-
- The Total Plan: This plan covers air conditioning, heating, electrical systems, plumbing systems, plumbing stoppages, water heaters, whirlpool bathtubs, refrigerators, oven ranges or stoves, cooktops, dishwashers, built-in microwaves, garbage disposals, washers and dryers, ductwork, garage door openers, and ceiling and exhaust fans. There is a $75 service fee.
- The Basic Plan: This plan covers everything that the total plan does except for air conditioning systems, refrigerators, and washers and dryers. There is a $75 service fee.
4) Select Home Warranty
Select Home is Consumer Affairs accredited, and Consumer Advocate chose it as one of the 2019 Best Home Warranty companies. It offers a variety of different plans both during real estate transactions and for homeowners already in their property.
Here’s what you need to know about getting a warranty through Select Home.
- LendEDU Rating: 3.84
- BBB Rating: B
- Gold Care: This plan covers AC and heating systems, plumbing, electrical, water heaters, and duct work. You can also get free roof coverage when you sign up as part of a special promotion.
- Platinum Care: This upgraded plan covers everything that Gold Care offers as well as plumbing stoppages, washing machines, garbage disposals, refrigerators, stoves and ovens, built-in microwaves, cooktops, dishwashers, clothing dryers, garage door openers, and ceiling fans.
- Bronze Care: This plan does not offer coverage for home systems, but instead only covers appliances including washers and dryers, garbage disposals, refrigerators, microwave ovens, cooktops, and dishwashers.
Select Home’s service fees vary by plan.
5) American Home Shield
American Home Shield was founded in 1971 and acquired by ServiceMaster in 1989. It is one of the largest providers of home warranties in the United States. More than 1.8 million homeowners have coverage through Home Shield and the company has paid out more than $2 billion in service claims in the past five years.
Here are some of the key things to know about getting your home covered by American Home Shield.
- LendEDU Rating: 3.50
- BBB Rating: B
Plans available through American Home Shield include:
- The Systems Plan: This plan covers heating, air conditioning and duct work, electrical, doorbells, smoke detectors, ceiling fans, plumbing including stoppages, water heaters, garbage disposals, instant hot water dispensers, and central vacuums. It does not provide any coverage for appliances. The service fee is $75, $100, or $125.
- The Appliances Plan: This plan covers appliances only including refrigerators, ranges, oven or cooktops, clothing washers and dryers, dishwashers, built in microwaves, trash compactors, freestanding ice markers, garage door openers, and built-in food centers. It does not provide any coverage for the home’s systems. The service fee is $75, $100, or $125.
- The Combo Plan: This covers everything the Systems Plan and the Appliances Plan cover. The service fee is $75, $100, or $125.
- Build Your Own Plan: With this option, you can decide exactly what systems and appliances you want your plan to cover. Your pricing will be determined by how comprehensive you make your coverage.
How Much Does a Home Warranty Cost?
The cost of a home warranty varies significantly based on the type of coverage and the area of the country where it is purchased. As a general rule, the higher the level of coverage, the more expensive the warranty will be.
The best home warranties have starting costs as low as $200 per year for a policy that just covers appliances, but prices can exceed $800 annually for a more comprehensive plan. A homeowner can add extra coverage to most plans, such as coverage for a swimming pool or an external well. Each addition will add to the cost of the warranty.
While homeowners can purchase a warranty at any time, the best deals are often found during a real estate transaction. Home warranty providers frequently offer the lowest prices and more comprehensive coverage during sales transactions. At the end of the first year, homeowners generally have the option to renew the plan.
Do You Need a Home Warranty?
Home warranties are often touted as a selling point when a house is on the market. They can be a way to give buyers peace of mind. But do homeowners actually need a home warranty?
Homeowners with newer homes probably don’t. In many situations, owners of new homes have coverage for appliances and systems through the builder or manufacturer. For these homeowners, the cost of a warranty—which will probably be $350 to $500 a year plus $50 to $75 for each service call—won’t be worth it.
However, for homeowners with older homes, a home warranty can make sense. If you have outdated appliances and systems, investing in a home warranty may be smart if you think you’ll spend more than the warranty’s cost on repairs.
Ask the Expert
Associate Broker at Keller Williams Advantage
I always recommend home warranties to my clients, especially my buyers. A typical one-year home warranty policy in my area costs between $400 and $600, and they cover most mechanical items (furnace, water heater, air conditioning unit, etc.) and appliances in a house.
I feel it’s very important for a first-time homebuyer to get a warranty to help with any unexpected issues that might arise after they move into their new home. On the seller side, many people aren’t aware of this but there are warranty companies that will cover the home during the listing period.
For example, if a dishwasher stops working during the time a house is on the market, or while it’s under contract but before closing, the warranty company will step in and cover the repair for the sellers. This can be very useful to a seller while they’re selling their home.
There are many home warranty companies out there, but there is one company that I like to work with because they allow my clients to hire their own contractor versus having to use a contractor of the warranty company’s choosing.
This is important to me because the client is in control of who to hire and they can get recommendations from myself or friends and family, so that they can ultimately hire a contractor that they trust.
The warranty company will then speak to the contractor, diagnose the issue, talk about coverage, and then reimburse the client for the repair costs.
What to Look for in a Home Warranty Company
When looking for a home warranty company:
- Determine if coverage is available in your area: Not all home warranty companies are authorized in every state.
- Find out how the warranty works: Can you choose a repair person yourself or are you required to work with one selected by the warranty company? Is there a service fee or deductible for work performed under the warranty? If so, how much is it?
- Check what’s covered with each company and each plan that you’re considering. If you have something in your house that you need to be covered, such as an expensive sprinkler system, be sure the warranty company will offer protection in case of problems.
- Read the fine print exclusions: Does the company deny claims for improper installation or code violations? Learning about exclusions upfront helps you avoid nasty surprises later.
While home warranties are not the best option for every homeowner, they can reduce costs associated with repairs for home appliances and systems.
Whether you get a home warranty after purchasing a house or are in the market for a warranty for your existing home, weigh the advantages and disadvantages before signing a contract.
Ask the Expert
Home Warranty Expert for ReviewHomeWarranties.com
Home warranty coverage may include home systems, such as air conditioning, heating, plumbing, and electrical, and/or home appliances, such as washer and dryer, refrigerator, oven, dishwasher, garbage disposal, and many other items.
In every particular case, the coverage depends on the home warranty plan purchased by the customer. Some plans include only basic coverage for one or two home systems and a limited number of appliances. More comprehensive plans may include all home systems and an extended list of appliances.
There are plans for systems only or appliances only. Most home warranty companies also offer optional items, like swimming pools and spas, that are priced a la carte and may be added to any plan.
To answer this question, we have conducted research based on 34 companies, 274 home warranty plans, and 14,053 different plan variations. We found that the average cost of a home warranty policy is $616 with a range from less than $49 for very limited coverage to over $2,400 for comprehensive coverage.
To explain such a large range, we considered several variables that could affect the cost of a home warranty plan. These included the state, plan type, term, deductible, house age, and house type.