How Much Does A Home Warranty Cost?
Most homeowners spend between $319 to $894 nationally.
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Whether purchasing a new home or maintaining an existing residence, homeowners sometimes face unexpected expenses. Broken appliances or malfunctioning home systems often make a big dent in the household budget. Fortunately, homeowners who supplement an insurance policy with a home warranty enjoy coverage for almost every situation.
Before you purchase a home warranty, it's helpful to learn about the cost, benefits and coverage offered. Check out ImproveNet to find a policy that is just right for you.
National Purchase a Home Warranty Costs
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|National Average Cost||$1,043|
|Average Range||$319 to $894|
How do we get this data? This info is based on 246 cost profiles, as reported by ImproveNet members.
Table of Contents
- Home Warranty Cost
- What Is A Home Warranty?
- Why Buy A Home Warranty?
- What Does A Home Warranty Cover?
- What Home Warranties Do Not Cover
- Home Warranty Vs. Home Insurance
- Best Home Warranty Companies
- Find A Contractor
Home Warranty Cost
For basic home warranty coverage, plans average from $350 to $600 per year. For extended coverage, warranties add an additional $100 to $500 per year, depending on the number and types of items added. When determining the cost of a warranty plan, it helps to consider the annual premium and the service charge (or deductible). This is a fee — usually from $50 to $100 — paid for each repair or replacement. Surprisingly, many companies charge the same warranty premium for a newer home as for an older home.
What Is A Home Warranty?
Home warranties provide service, repair or replacement for major appliances and systems in the home. Prior to the purchase of a home warranty, careful review of the plan helps homeowners understand all the costs and benefits offered.
How the Process Works
After purchasing a home warranty, a homeowner files a claim by phone or through the company's website when something breaks or is working properly. Depending on the policy, the company or the homeowner contacts a service provider to make the repair. The homeowner pays a service fee when the repair is complete, and the warranty company pays the remainder. While some repairs are done on the spot, others may require customers and service providers to wait for ordered parts.
Why Buy A Home Warranty?
Replacing major appliances and maintaining home systems like heating and electrical can cost a pretty penny. Home warranties help supplement insurance to cover any appliance issue or system problem for a minimal fee. A new home purchase often comes with an extensive warranty that builders offer new homes.
What Does A Home Warranty Cover?
Warranty companies offer an array of plans depending on what a customer needs. Coverage for a home warranty depends on the situation. For instance, builders offer new-home warranties that are different than home service contracts provided for existing homes.
Home Builder Warranties
Builder warranties usually cover structural issues for up to 10 years. These might include problems with wiring or cracks in the home's foundation. Under these policies, homeowners also typically have two years of protection for problems with plumbing and electrical systems and one year of protection for issues with paint and walls. In new homes, manufacturer warranties often cover basic appliances, so builder warranties typically offer just six months of protection from appliance defects.
Home Service Warranties
Home service warranties do not cover major structural problems. This type of warranty covers repair or replacement of items like built-in appliances, plumbing and electrical systems. Some sellers offer warranties on existing homes, or homeowners may choose to purchase a policy on their own. Although every policy is different, basic coverage usually includes:
- Built-In Microwaves
- Ovens & Ranges
- Ceiling Fans
- Exhaust Fans
- Garbage Disposals
- Sump Pumps
- Water Heaters
- Whirlpool Tubs
- Electrical Systems
- Heating Systems
- Plumbing Systems
What Home Warranties Do Not Cover
According to standards set by the Federal Trade Commission, home builder warranties should cover all workmanship and materials used in a home's construction, but exceptions are made for small cracks in cement, brick, drywall or tile. Basic coverage for a home service warranty omits some important items. Fortunately, many companies offer enhanced policies to include:
- Air Conditioner
- Central Vacuum System
- Garage Door Opener
- Hot Tub
- Well Pump
- Septic System
While some sellers of existing homes offer a home warranty as a purchasing incentive, most home service warranties do not cover pre-existing problems. A home inspection protects potential buyers by uncovering pre-existing problems prior to purchase.
Home Warranty Vs. Home Insurance
While it seems like homeowners insurance coverage and home warranty coverage might be one and the same, they are very different. Homeowners insurance covers interior or exterior damage to the home or property caused by fire, bad weather, falling trees, lightning and other natural disasters. These policies also cover theft and vandalism to the home or property. Home buyers are required to purchase homeowners insurance prior to a transfer of property. Unless a seller provides it, a home warranty is an optional purchase.
Best Home Warranty Companies
As with many products, finding a good home warranty takes time and effort. It helps to evaluate the coverage offered by many providers and narrow a list to about 10 companies. When choosing a home warranty, consider options like customization, comprehensive coverage, good repair guarantees and price. Read customer reviews to consolidate your list to a few companies, and read through the fine print of each policy carefully to make a final selection. According to customer reports, top home warranty companies include:
- American Home Shield
- The Home Service Club
- America's 1st Choice Home Club
- First American Home Warranty
Find A Contractor
A home warranty helps cover situations that home insurance doesn't, from a dishwasher malfunction to a breakdown of your electrical system. To select the right home protection plan, it helps to do your research and read customer reviews. If you're ready to shop for a home warranty, let ImproveNet help.
Get free estimates from local contractors
Last updated on May 15, 2017