Is a Home Warranty Worth It? Do You Really Need a Home Warranty?

You do not have to wait for February 10, National Home Warranty Day, to protect your vital appliances for your home to run smoothly. Instead, understand its importance and sign up now. Here, we will explain everything you want to know about Home Warranties before you get yourself a plan best suited to your home requirement.

What Is a Home Warranty?

A home warranty is an annual service agreement covering several home components, systems, and appliances from an unexpected repair or replacement cost. It is a contract between two parties – a home warranty company and a homeowner to provide discounted repair and replacement services.

Not to be mixed with home insurance, a warranty is more of a service contract that covers repair or replacement of items that break down due to normal wear and tear. They mainly include: –
Washer Dryer,

Ranges, ovens, cooktops, Built-in Microwaves, Water Heater, Humidifier,
Plumbing system,
HVAC System,
Central heating system, Interior Electrical System, Garage Door Openers, Roof Coverage, Swimming Pool, and Garbage disposal.

However, not all companies may cover each of the above in their home warranty package. Some plans only have few components with certain coverages. If you need more, you can select an optional package to provide additional coverage at an additional cost.

A home warranty is different from homeowners insurance because it does not cover natural disasters like fires, earthquakes, hail, and tornadoes. It also does not protect the homeowner against theft or property crimes. It even excludes certain types of water damage that could affect the entire structure of the house.

Who can buy a Home Warranty?

Home warranties are mostly sought after by a prospective home buyer when purchasing a home. The home buyer would – determine the coverage needs, contact several reputable companies for quotes, and understand the coverage before deciding on which is most suitable in the future for his/her home.

Sometimes, the seller may offer to purchase a Home Warranty on behalf of the buyer to provide that extra bit of service. It helps to reassure a buyer and safeguards the seller against complaints about home defects that arise after the sale closes. Even a real estate agent or family friend can purchase a home warranty on behalf of the home-buyer. After the homeowner moves into the home and something breaks down, the homeowner or seller need not worry – only call the home warranty company, which will send a service person to examine the problem. There will be no repair or replacement cost if the appliance /component is under home warranty. The homeowner may only require to pay a marginal service fee of around USD 75 to examine a problem.

What Does a Home Warranty Cost?

In home warranty, the annual premium is a cost factor Typically, any home warranty costs a couple of hundred dollars, which can be either paid as a lump sum or in instalments while purchasing a new home. The cost will depend on the type of home warranty plan (basic/extended) and the type of property (single- family detached, condo, townhouse, duplex). The annual premium may be higher for a home that is brand new or more than 5000 square feet. In addition to the annual premium, home warranty companies also charge a service call fee or trade call fee of around $75 to $125 every time the homeowner/warranty holder requests a single examiner to view a problem. It has to be paid, despite the Home Warranty company denying the claim.
If the problem requires more than one type of contractor to visit (e.g., a plumber and an electrician), the homeowner may have to pay the service fee for each.

Remember getting a home warranty does not mean the home is free from any repair cost. Check the services included and the Terms and Conditions of Home Warranty before making the payment.

The 5 Advantages Home Warranties

1. It is the best option for a homeowner who does not have an emergency fund for unforeseen repairs.
2. It offers 24/7 services for those who are not handy around the house or do not have time to contact a contractor.
3. It provides confidence to a home buyer who has limited information about components in the house.
4. For home sellers, it decreases post-sale liability and protects against buyer complaints for a year or more after closing the sale.
5. It strengthens the listing value of the property.

The 5 Disadvantages of a Home Warranty

1. The ‘not well maintained’ clause remains a grey area for the homeowner.
2. The homeowner may not be able to select the brand or model of a replacement
3. May not get the best or expert service staff from the designated contractor.
4. Warranties are marked by numerous exclusions and limits per repair/per year.
5. If nothing breaks down during the year or the claim denied, the money is lost.

The Top 10 Home Warranty Companies 2021

Here is the list of the best home warranty companies. Before you decide on the right one for your home, please consider what the home warranty covers and which top home warranty company is available near you.

1. Landmark Home Warranty
2. American Home Shield
3. Choice Home Warranty
4. AFC Home Club
5. First American Home Warranty 6. Select Home Warranty
7. Total Home Protection
8. Old Republic Home Warranty
9. 2-10 Home Buyers Warranty (Information credit: usnews.com)
10. Liberty Home Guard


It is necessary to weigh the pros and cons before getting a home warranty. If you are capable enough to put the home warranty premium payments aside into an emergency fund, it might lead to savings in the long run. If nothing breaks down, your money remains safe with you. Of course, if the home seller offers the home warranty along with the property, then one should accept it. A home warranty is not a solution to the risks and hidden costs faced by a homeowner but an option for service. Remember, it may sound like a great safety net, but how much financial protection it provides remains a question. Read the Terms and Conditions of the warranty contract thoroughly and weigh the pros and cons before entering into a Home Warranty Contract.