A home warranty can be a reasonably priced method to limit the amount of money you have to pay if a home system or appliance needs repair. For a dollar or two a day, a home warranty can provide you peace of mind whether you own an older or a newer home.
The Daily Caller has looked at a variety of home warranty plans to find the ones that offer the best value. Based on our research, Choice Home Warranty and America’s 1st Choice Home Club are the best options.
Read on to find out what a home warranty costs, what repairs are usually covered, and whether this kind of service contract is right for you.
What Is A Home Warranty?
A home warranty is a service contract between you (the homeowner) and a home warranty company that covers the repair or replacement of specific items listed in the contract. What’s covered by a warranty can vary, but items that are frequently covered include major appliances and home systems such as plumbing or electrical.
What’s The Cost Of A Home Warranty?
On average, a home warranty premium costs between $350 and $800 a year, although the annual premium can vary based on several factors. Things that can affect this cost include:
- What the policy covers: A comprehensive home warranty costs more than a limited plan.
- Your deductible: Some companies provide a range of deductible options, and higher deductibles result in a lower premium.
- Where your property is located: Some companies charge different prices in different states.
- The size of your property: A home warranty may cost less to cover a small condo than a 6,000-square-foot home.
- Whether you pay your premium in a lump sum or monthly: You may pay more if you spread the premium out into monthly installments.
Depending on your provider, you’ll also likely pay a service fee (sometimes called a deductible) when you get service. Keep reading to learn how this cost can vary — and if it’s worth it.
How does coverage affect the cost of a home warranty?
The more coverage you have, the more the warranty costs. You’ll find several levels of coverage available. For example, a home warranty company might offer plans that cover:
- One specific appliance, such as a dishwasher
- Multiple appliances, such as your oven, dishwasher, and refrigerator
- Major appliances and systems, such as your kitchen appliances, electrical, and HVAC
Some warranties give you the option of add-ons. This option allows you to get coverage for items that aren’t normally covered, such as your swimming pool pump, for an additional fee. Although this can increase your costs, you will have the benefit of additional coverage for all your systems and appliances.
Other companies offer two or three levels of coverage, such as a “basic” and “premium.”
For instance, Choice Home Warranty has two options. The Basic Plan covers:
- Heating system
- Electrical system
- Plumbing system
- Plumbing stoppage
- Water heater
- Whirlpool bathtub
- Oven/range/stove
- Cooktop
- Dishwasher
- Built-in microwave
- Garbage disposal
- Ductwork
- Garage door opener
- Ceiling and exhaust fans
The Total Plan from Choice covers all the systems and appliances that the Basic Plan covers and adds the following:
- Air conditioning system
- Refrigerator
- Clothes washer
- Clothes dryer
Depending upon the warranty company, basic coverage of a few appliances might cost $300 a year, while a more comprehensive plan covering appliances and systems might cost $800. When estimating your own costs for a home warranty plan, consider what you want to make sure will be covered.
How Does A Home Warranty Work?
The premium isn’t the only cost associated with a home warranty. It’s important to understand how a home warranty works and what other costs you might encounter when you use your plan.
If a covered system or appliance stops working, you call the home warranty company, which will send one of its contracted repair people out for a service call. You pay a fee for this service call – usually between $75 and $125. The technician will determine if the item can be repaired or needs to be replaced.
Depending on your policy, there could be a limit to how much the company will pay towards a replacement item. For instance, the maximum payout might be $1,500 for a new air conditioning system. If the actual cost of replacing your AC comes to $5,000, you pay the difference.
Even if a home warranty doesn’t cover the entire cost of repairing or replacing the item, however, it has still reduced the amount that came out of your pocket.
Typical Costs Of Home Repairs
One of the biggest benefits of a home warranty is peace of mind. When you have a home warranty, you know that you won’t have to pay full price for a repair or replacement of an appliance or major home system you can’t live without. If you haven’t shopped for a refrigerator recently, for example, you could be in for major sticker shock. A new refrigerator could cost you $1,900 or more, and a typical repair could be around $300. A home warranty could help cushion your budget from that kind of unexpected expense.
Here are some other average repair/replacement costs:
| Repair Cost | Replacement Cost | |
| Heating System | $285 | $4,249 |
| Electrical System | $317 | $1,287 |
| Water Heater | $546 | $1,065 |
| Clothes Washer | $310 | $1,250 |
What A Home Warranty Doesn’t Cover
A home warranty is designed to cover normal wear and tear to home systems and appliances. Before you contact the home warranty company to request a service call, make sure that the system or appliance is listed on your contract as a covered item.
Even if the item is covered, there are times when the home warranty company will refuse to cover the repair. Most service contracts don’t cover items that were not properly installed or that have not been properly maintained.
Your best defense against having your claim refused is to make sure you use a reputable contractor when you have new items installed and to perform regular maintenance on these items. Keep receipts so you can argue your case should your claim be denied.
If you’re buying an older home and plan to buy a home warranty, schedule a home inspection so you know the condition of the appliances and systems in the house. Ask the home seller to provide you with receipts for service they’ve had performed.
What About Home Insurance?
Some homeowners, especially first-time buyers, might be under the impression that their homeowner’s insurance will cover breakdowns resulting from normal wear and tear. However, home warranties and home insurance are different products designed for different situations, and should be in your budget under separate categories.
Homeowner’s insurance protects you from major damage that occurs because of a peril such as a fire. It doesn’t cover you if your water heater quits heating water because it’s an old unit. If you have a mortgage, your mortgage company requires you to have homeowner’s insurance, because the lender wants to be sure major structural damage will be repaired. It doesn’t want to lose the value of its collateral.
Home warranties, on the other hand, are designed to help the homeowners cover the costs of normal wear and tear. You know that your 15-year-old air conditioning unit is going to stop cranking out cool air at some point, and a home warranty can help you cover the cost of repairs or replacement. Unlike with homeowner’s insurance, whether to buy a home warranty is completely up to you.
The Advantages Of Buying A Home Warranty
There are many reasons people choose to buy a home warranty.
Access to pre-checked technicians. If your phone contacts list isn’t filled with the names and numbers for AC repair technicians and appliance repair services, you don’t have to worry. The home warranty company assigns a repair person from its list of technicians that meet its standards. You don’t have to call all your friends to get recommendations for a service person.
One-call convenience. Once you call the warranty company and file the claim, the customer service department should take care of the rest.
Less worry. With a home warranty in place, there’s less chance you’ll face a huge bill if an appliance or system breaks. While the warranty might not cover the entire bill, the amount you get from it could certainly limit the pain of writing a large check.
Save money. If a covered item can be repaired, usually the only cost you’ll pay is the service fee.
Reasons You Might Not Want A Warranty
You might not need to use it. As with any kind of insurance or service contract, you might have a lucky year where nothing breaks. If you would consider the premium you paid that year “wasted money” rather than considering the price as purchasing peace of mind, a home warranty might not be a good investment for you.
Living by the warranty’s rules. The home warranty company decides whether to fix or replace an item. If you think it’s time to replace but the company will only pay for a repair because it’s cheaper, you’re stuck with their final decision. If the company does decide to replace the broken item, you’ll only get a comparable model (or the amount needed to buy a comparable item). That could rein in your hopes of upgrading an appliance.
Waiting. The warranty company may have a policy guaranteeing a service call within a certain time, often 48 hours, but on weekends or holidays that could stretch to four days. Read your contract to learn the company’s policy and check reviews to see if the company lives up to those promises before you select a warranty provider.
Good Candidates For A Home Warranty
In certain situations, buying a home warranty makes a lot of sense. These situations include:
- First-time home buyer. First-time buyers sometimes use all their savings for the down payment and are often stretched for cash. In that case, the warranty can alleviate their concerns about the dishwasher dying or the plumbing getting backed up.
- New to the area. If you’ve just moved to a new location, you probably don’t know any repair people. With a home warranty plan, you get service from technicians that the warranty company has already vetted, and you don’t have to spend hours on Yelp trying to find qualified repair personnel.
- Home sellers. Offering a home warranty can make your home stand out among listings, and the extra bit of assurance the home warranty gives buyers can be enough to send certain home shoppers your way. Some home warranty companies will cover you during the listing period if you cover the cost of a one-year warranty for your buyer. (Warranty coverage can also be a huge relief if a system breaks down while you have your home listed for sale.) Ask your real estate agent for recommendations.
- Buyers of older homes. The older the appliances or systems are in a home, the more likely they will break down.
There are situations when a home warranty might not meet your needs. These include:
- You buy a brand new home. The builder usually provides a warranty on the construction, and all the new appliances and systems come with warranties, anyway, so the coverage would be redundant.
- You’re handy. If you can fix anything – or you have a father-in-law who’s never met something he can’t repair – you may save money by doing your own repairs.
- You’ve got a hefty emergency fund. If spending an unexpected $2,000 on a new refrigerator or $5,000 replacing air conditioners isn’t going to strain your budget, you’re in good shape. Just put the $300 to $600 a home warranty would cost into your emergency fund each year and pay for the repairs yourself.
Steps To Take Before You Sign Up
There are a lot of things to consider when you’re looking for a home warranty plan. These include whether the policy covers the appliances and systems you’re most concerned about, how quickly the company will respond to a service call, and whether you’ll be charged for repeat visits if the problem doesn’t get fixed the first time.
Before signing any service contract, read it closely so that you know what is covered, what exclusions are involved, and what you can expect when you file a claim. It’s a good idea to read consumer reviews, too, so you know that the company lives up to its promises.
Our Top Picks For Home Warranties
After researching the top home warranty plans, The Daily Caller recommends Choice Home Warranty and America’s 1st Choice Home Club as the best home warranty providers.
Choice Home Warranty: Best Overall Home Warranty
For more information about their plans, you can call 848-256-4657 or fill out a form online here. This home warranty costs about $1 to $1.50 a day, which is a competitive price for the coverage you receive. Choice offers two plans. The Basic Plan covers most home appliances and systems, and the Total Plan covers even more. You can also customize the plan by adding items such as a second refrigerator for an extra fee.
Choice Home Warranty also has a low service fee of just $60 to $75, and the company offers a 90-day repair guarantee.
If you have an older home, Choice Home Warranty may be the way to go because it doesn’t deny coverage based on the age of your home or the appliances and systems in it, as long as you have performed routine maintenance.
America’s 1st Choice Home Club: Best For Customizable Plans
America’s 1st Choice Home Club provides four levels of home warranty plans, allowing you to choose the coverage you want without having to pay for coverage you don’t need. At the most basic level, the Systems Plan, you’ll get coverage for your water heater, HVAC system, plumbing and electrical systems. At the highest level, the Platinum Plan, you’ll be covered for all those systems, as well as for major appliances and plumbing stoppages. There are also options to add coverage for items like your septic system or swimming pool.
The cost for America’s 1st Choice Home Club coverage starts at about $1 a day, and the company guarantees the work its technicians perform for the life of your membership. Learn more by calling 678-335-2181 or filling out a quick form.
Unlike just about every other home warranty company, America’s 1st Choice Home Club allows you to choose your own service provider rather than having to accept one the company selects. If you’ve got a heating guy you trust, you can have him do the work and get reimbursed from the warranty company.
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