Home Warranties Often Aren’t Worth It: How to Judge for Yourself

A home warranty can help you repair or replace home appliances and systems. But don’t enter into a contract before asking these key questions.

If you’ve bought a home recently, you may have purchased or received a home warranty.

However, consumers frequently expect more from these plans than they deliver.

Home warranties aren’t insurance policies. They’re service contracts. Like a service contract that covers repairs to your computer, a home warranty is a company’s agreement to pay for fixing — and, if necessary, replacing — specified home components.

A home insurance policy, in comparison, covers losses if your home and its contents are damaged or lost to theft, fire or other causes.

A basic home warranty costs about $350 to $500 a year or more. A warranty typically covers kitchen appliances, plumbing, water heater, furnace, sump pump, whirlpool tub, and ceiling and exhaust fans, Angie’s List says.

“Enhanced” plans, purchased for another $100 to $300, provide added coverage for such things as a washer and dryer, air conditioning, refrigerator and garage door opener. Optional items can be added, including pools and septic systems.

You may be covered already

If someone gives you a home warranty, accept it — at least while it’s free. But understand that, even with someone else paying the premiums, you’ll likely pay a service fee — typically $50 or $75 — each time you need a repair, according to Angie’s List.

Before buying a home warranty, learn what coverage you may already have. For example, if you’re buying a newly built home:

  • The home appliances and systems typically have one-year warranties.
  • Most states require builders to warranty the home’s structural elements for up to 10 years.

Also, when you buy new furnishings and appliances, use a credit card that extends the product’s warranty. That can add as much as an extra year of protection.

Is a home warranty right for you?

Sellers may offer a year’s coverage as an incentive to home shoppers. Owners of new homes frequently pay the premiums after their free year expires.

Real estate agents sometimes give home warranties to clients as a thank you gift for purchasing a home. Some buyers of older homes find that a warranty gives them confidence.

Other homeowners decide they’re better off setting aside savings to cover home repairs and replacements.

One way to think about your needs: Compare the age of each covered item with its average life span. To do so, use this chart from the National Association of Certified Home Inspectors. 

With expensive components near or past their life expectancy, a home warranty might be a good idea. Components that have pre-existing problems, however, typically are excluded from protection.


Buyers who purchase a previously owned home inherit used appliances and home systems with wear and tear. A home warranty can help cover the cost if things break down.

New Jersey real estate agent Lorraine Labonne-Storch told HSH.com that a few days after closing on a home she purchased, the boiler caught fire. It cost her $12,000 to replace.

A home warranty would have covered a portion of the cost, she said. She’d had the option to purchase a warranty when she bought the house, but declined it.


However, home warranties top the list of complaints received by Angie’s List. One reason, the site says, is the difference between customers’ expectations and what the plans actually deliver. Homeowners also complain about the quality of service from warranty companies.

Before buying a home warranty, read the contract and understand exactly what it does and does not cover. For example, some contracts will not provide coverage if:

  • You didn’t maintain the appliance.
  • The appliance was installed incorrectly.
  • The appliance had too much wear and tear.

If you haven’t read it carefully, be prepared for surprises. Don’t assume:

  • Your policy will replace a faulty component. The warranty company may insist on repairing it instead.
  • You can call your favorite service provider. Home warranties usually require you to use a contracted servicer.
  • The warranty will cover the entire cost. Although she would have been happy to have it, Labonne-Storch said the home warranty she declined would have paid only up to $1,600 to repair or replace the $12,000 boiler.

Find out what’s covered, and what the warranty provides. There may be exclusions and limitations. Perhaps the refrigerator is covered, but the ice maker is excluded. Claims may be rejected because of pre-existing problems or insufficient maintenance.

Learn who will perform the repair work. Also, find out if you can cancel the policy. Most contracts allow a 30-day “free look” that allows a buyer to cancel within 30 days and get a full refund, says the Service Contract Industry Council.

Vet the company

Research a company using these sources:

  • Better Business BureauType in your city’s name. On the next page type the company’s name. Or type “home warranty.” You’ll see if a company is BBB accredited. That means a company agrees to resolve complaints with the BBB and pays an accreditation fee of anywhere from $400 to several thousand dollars. See company ratings, if any, and a summary of complaints to the BBB.
  • Your state attorney general’s office: Find yours from the National Association of Attorneys General.
  • Your state insurance commissioner: Locate yours with this National Association of Insurance Commissioners map. Although home warranties aren’t insurance policies, 32 states require companies offering warranties to register or be licensed by the state’s department of insurance.

What’s your experience with home warranties? Share with us in comments below or on our Facebook page.

Stacy Johnson

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  • Senya

    A home warranty may not be an insurance policy, but my warranty provider sure leaped to attention when I filed a complaint with the state Insurance Commission. They had refused to replace a gas heater, which they had “repaired” five times, each instance taking about a week to get a repair company to call me, and then to find a mutually workable appointment time — so that essentially I was without heat for half the winter. I asked the warranty company to replace the heater, but they relied on a provision in the contract that requires a repair technician to “certify” that an appliance is “not repairable” before the warranty provider will replace it. Of course, I’d read that provision, but I didn’t really understand it in practice (which is the case with so many aspects of insurance policies). I soon realized that NO repairman would want to certify that an appliance was “not repairable”, on pain of losing his relationship with the warranty company. I went round and round with the company, while they stonewalled, until I finally complained to the Insurance Commission. Two weeks later I got a letter from the warranty provider, offering me the price of the heater and the cost of labor to replace it. YES!!

    That said, I’m keeping the warranty current. It truly does have its limitations, and if I could get better coverage I would certainly change companies, but for about $400 a year and a small deductible, plus just a little bit of a fight, it has already covered repair of the gas heater, a garage door, a really crappy old stove, and an exterminator to get rid of ants. In my case it’s been worthwhile.

  • transmitterguy

    DO NOT BUY A EXTENDED WARRANTY ON ANYTHING. IF IT BREAKS THROW IT AWAY AND BUY A NEW ONE! Everything has a 1 year or more warranty anyway. If your thing is 2 years old and It breaks, you got the life out of it Throw it away or sell it as broken on the local bargain sheet. My buddy fixes washers and dryers and fridges, He and other repair guys look at these bargain papers every day looking for a appliance they can fix and make money from, plus they will pick it up free put a price of $100 dollars on it and they can still make money. Take the $250 you would have paid to fix it and the $100 from selling it and buy a new one. Remember appliances are only made to last 5 years nowadays, not 15 years like in the 70’s. Don’t fix and old laptop or Ipad thats over 2 1/2 years, BECAUSE IT’S OLD TECHNOLOGY. Big screen tv 2 or 3 years old and doesn’t work? Sell it broken and buy a new one with better technology, you will be happier.

  • Terri Lane

    As the president of a home warranty company, I agree with this article. The most important thing you can do as a consumer is to read the home warranty contract! The biggest problem we run in to is with the folks who have not read their contract. If you read the contract, you will know what the terms and limitations of the warranty are and will be better able to make proper use of your home warranty. We save our clients a ton of money each year and we are gratified that many of our first time clients renew their home warranty year after year. A home warranty is a great investment whether you are in a real estate transaction, or just getting coverage for the home in which you live. Do a bit of research and you will find that like in any industry, there are good companies and not so good. Always check with your local BBB, as they are a great resource to find out about a company and how they deal with consumer complaints. Signed, Terri Lane, President

  • Terrance Pitts


  • Caitlin Burgess

    It seems like the best candidates for these sort of plans are those who can’t afford an expensive, unexpected fix and for those with really high-end and expensive appliances. Definitely make sure you read all the fine print before you commit to a plan. For those of you in Minnesota or North Dakota, HomeSmart from Xcel Energy is one company to check out when looking at plans.

  • BlackBeauty

    I don’t know why my original comments were removed but here is what happened to me: I purchased a Stanley Home Warranty they refused to repair the air conditioner and the dishwasher or honor the added benefit of maintaining the septic tank. I paid them in full for a full year. I have a complaint pending in New Jersey where they

    are based. I am very disappointed in Stanley Home Warranty and I consider them scam artists.

  • Texasperry

    I received a home warranty on the second home I purchase. It was part of the sale paid for by the seller. I was living in Ohio at the time. Heating season started. I had my furnace checked by my preferred HVAC guy. He told me I had a cracked heat exchanger and gave me a price to replace it. I called the home warranty company. They were out of FL. I explained what was found. They sent out a person from the service company they used in my area. I had to pay for the service call. The heat exchanger is covered I was told. The next day I was told parts were not available. They had to come out and measure for a new furnace. I knew that was BS because my guy quoted the replacement part. But since I was told the new furnace was covered. The work was done and I was presented the bill. WHAT? I thought it was covered. He said well, not covered was sheet metal work, the curb and I was charged a upgrade fee, becasue the furnace removed standing pilot and the new one had electric ignition. I akse why I was not told this up front. The salesman said we did not know. That bill was more than twice what my guy quoted to replace the heat exchanger. So, I asked my guy what he would have charged to replace my furnace. His quote was still less than the bill I received. I used that to argue the cost and lost.
    I would never consider a home warranty again. I have paid for one on every home I have sold since. Realtors make it a selling point to the uneducated buyer.

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