Is a Home Warranty Worth It?

When buying a home, a home warranty is a helpful safeguard to protect buyers from financial burdens associated with appliance issues and breakdowns.

Scott Castillo
Scott Castillo

If you’re going to be buying a home soon, you should be considering the different ways that you can secure your investment as both a buyer and a new homeowner.

Besides home insurance policies, a home warranty can be a great way to safeguard your finances against losses due to issues with the property’s appliances and major systems.

Here is a full overview of home warranties, discussing:

  • What a home warranty is
  • How a home warranty protects homeowners
  • How much do home warranties typically cost?
  • How to decide if a home warranty is worth it for you

What is a Home Warranty?

A home warranty is a protective policy that a homeowner can purchase that will cover the expenses associated with repairing certain home appliances or systems in case they break down or are damaged after closing.

While a home inspection will review the current condition of your home’s appliances and major systems and determine if any repairs are needed, a home warranty policy can offer financial protection in case an unexpected issue occurs after you’ve officially become the new owner.

Home Warranty vs Homeowners Insurance

Buyers should be aware that a home warranty is different from a homeowners insurance policy.

Both offer financial protection in case of unexpected damages or issues, but a homeowners insurance policy only covers the property’s main structure and personal belongings in the home while a home warranty covers home systems and built-in appliances.

What Does a Home Warranty Cover?

The exact details of a home warranty policy may vary depending on the package you purchase, the provider, and other circumstances. However, a typical home warranty will offer protection for the home’s major systems and home appliances.

Most home warranties cover the costs of repairing or replacing:

  • Plumbing systems
  • Electrical systems
  • Heating and cooling infrastructures
  • Washing machines
  • Dryers
  • Ovens
  • Garbage disposal systems

Generally, home warranties cover home appliances that are built-in to the property and were purchased with the home.

Keep in mind that home warranties may not offer financial coverage for repairs associated with appliances that are not incorporated into the property, such as free-standing toaster ovens and microwaves. However, built-in appliances such as ranges and the property’s water heater are usually covered by most home warranty packages.

How Much Does a Home Warranty Cost?

The cost of a home warranty plan varies depending on the provider you choose and the package you opt for. Homeowners pay for their home warranty monthly and are charged additional service fees when a repair is made.

Most home warranty plans cost homeowners between $25 and $65 per month — with more expensive packages reaching $125 per month and the most affordable options costing only $7 per month.  

For service charges, expect to pay an additional fee between $50 and $150 on top of your monthly bill.

Is a Home Warranty the Right Choice For You?

Since a home is one of the most important purchases made in a lifetime, it’s always important to take precautions and protect your investment.

If you’re buying a home with a mortgage loan, it’s likely that you will be required to take out a homeowner's insurance policy. In some cases, homeowners insurance is bundled into your home loan by your lender.

While you may not be required to opt for a home warranty, it’s still a good idea because repairing broken appliances or elements of the property’s major systems can be expensive.

For example, replacing your home’s water heater can cost anywhere between $800 to $3,000 depending on which type of water heater you purchase. Repairing an HVAC usually costs between $100 and $600, while replacing the unit can cost up to $7,500.

The additional monthly bill may not be appealing, but the financial protection offered by a strong home warranty plan can help you access significant savings over time as a homeowner.

Pros and Cons of a Home Warranty

Pros of a Home Warranty:

  • Your home appliances and major systems are protected in case damages, breakdowns, and other issues occur.
  • For a small monthly cost, you can avoid large pay-outs when emergencies happen.

Cons of a Home Warranty:

  • Since you pay your home warranty policy every month, you might be paying even when you have no issues with your appliances or home systems.
  • Depending on the policy you choose, you may have property issues that are not explicitly covered by your home warranty.

Let a Top Agent Guide You Through the Big Decisions

As a home buyer, you will be making many big decisions that can affect the experience you have as a homeowner. To help you make the best decisions and weigh your options, the best asset to have is a top agent who knows your market.

An experienced, knowledgeable, and professional real estate agent will be able to answer your questions and serve as your guide to home buying, homeownership, and beyond.

To get in touch with top agents in your area, work with

Scott Castillo

Scott Castillo