Homeowners Warranty Insurance: What You Need to Know

If you’re a homeowner, you understand the importance of protecting your investment. From routine maintenance to major repairs, it can be costly to keep your home in good condition. That’s where homeowners warranty insurance comes in. This type of insurance can provide coverage for unexpected repairs and replacements, giving you peace of mind and potentially saving you money in the long run. In this article, we’ll explain what homeowners warranty insurance is, how it works, and whether it’s right for you.

What is Homeowners Warranty Insurance?

Homeowners warranty insurance, also known as a home warranty, is a type of service contract that provides coverage for the repair or replacement of certain home systems and appliances. This coverage is typically separate from homeowners insurance, which protects your home and personal property from damage or loss due to perils like fire, theft, and natural disasters.

With a homeowners warranty, you pay an annual or monthly fee in exchange for coverage of specific items, which can vary depending on the provider and plan. Common items covered by a home warranty include:

Heating and cooling systems
Kitchen appliances (e.g. refrigerator, oven, dishwasher)
Plumbing and electrical systems
Water heater
Ceiling fans
Garage door opener
Washer and dryer
Pool and spa equipment
Roof leaks

Note that not all home warranty plans cover the same items, so it’s important to read the terms and conditions carefully before signing up.

How Does Homeowners Warranty Insurance Work?

When a covered item breaks down, you can file a claim with your homeowners warranty provider. Depending on the plan you have, you may be responsible for a service call fee (usually around $75-$125) each time you use your warranty. Once the claim is approved, the provider will send a licensed contractor to diagnose and repair the problem. If the item cannot be repaired, it will be replaced. The cost of the repair or replacement is covered by your warranty, up to a certain limit which is outlined in your contract.

It’s important to note that not all repairs or replacements are covered by a home warranty. For example, if the damage is caused by neglect, misuse, or pre-existing conditions, it may not be covered. Additionally, many warranties have exclusions for certain parts or types of damage. Be sure to read your contract closely to fully understand what is and isn’t covered by your home warranty.

Is Homeowners Warranty Insurance Worth It?

Whether or not a home warranty is worth it depends on your individual situation. Here are some factors to consider:

Your Risk Tolerance

If you’re the type of person who worries about unexpected expenses and wants to minimize risk, a home warranty can provide peace of mind. Knowing that you’re covered for major repairs and replacements can relieve stress and help you budget for future expenses.

The Age of Your Home and Appliances

Older homes and appliances are more likely to require repairs or replacements. If your home is over 10 years old and your appliances are aging, a home warranty may be a wise investment. However, if your home and appliances are relatively new, you may not need the coverage as much.

Your Budget

A home warranty can be a cost-effective way to manage unexpected repairs and replacements. Rather than paying out of pocket for expensive repairs or replacements, you can spread the cost over time with a monthly or annual fee. That being said, if you have a large emergency fund and can afford unexpected expenses, a home warranty may not be necessary.

Your DIY Skills

If you’re handy and enjoy tackling home repairs on your own, a home warranty may not be as valuable to you. However, if you prefer to hire professionals or lack the necessary skills to do repairs, a home warranty can save you time, stress, and money.

FAQs About Homeowners Warranty Insurance

How Much Does Homeowners Warranty Insurance Cost?

The cost of homeowners warranty insurance varies depending on the provider, plan, and coverage. On average, homeowners pay between $350-$600 per year for a basic plan. However, more comprehensive plans can cost upwards of $1,000 per year.

How Long Does a Home Warranty Last?

Most home warranty contracts last for one year, although some providers may offer longer or shorter terms. Before purchasing a home warranty, be sure to read the contract carefully to understand the duration of coverage.

Is Homeowners Warranty Insurance Transferable?

Many home warranties are transferable to a new owner if you sell your home. This can be an attractive selling point for buyers, as it provides added peace of mind and potentially saves them money on repairs and replacements. However, there may be fees involved in transferring the warranty. Check with your provider for details.

What Items Are NOT Covered by a Home Warranty?

Most home warranties have exclusions for certain items, such as:

  • Pre-existing conditions or damage
  • Items not properly installed or maintained
  • Cosmetic damage or wear and tear
  • Damage caused by natural disasters or acts of God (e.g. earthquake, flood)
  • Items covered by a manufacturer’s warranty

Be sure to read your contract carefully to fully understand what is and isn’t covered by your warranty.

How Do I Choose a Homeowners Warranty Insurance Provider?

When choosing a home warranty provider, consider the following factors:

  • Reputation: Look for providers with a good reputation and positive customer reviews.
  • Coverage: Check what items are covered by the warranty and ensure they align with your needs.
  • Limits and exclusions: Read the contract carefully to ensure you understand the limits and exclusions of the warranty.
  • Cost: Compare pricing and fees from multiple providers to ensure you’re getting a good value.

By considering these factors and doing your research, you can find a home warranty provider that meets your needs and budget.


Homeowners warranty insurance can be a valuable investment for homeowners who want to protect their investment and manage unexpected repairs and replacements. By understanding how a home warranty works, what’s covered, and whether it’s worth it for your individual situation, you can make an informed decision and find the right coverage for your needs.