Last updated: September 2026. This guide is independently researched by the HomeWarrantyScope Team. Read our Advertiser Disclosure to learn how we make money.
Are home warranties worth it? Yes, generally, if you own an older home, have aging appliances or systems, and would rather pay a predictable annual fee than face a surprise repair bill. Old Republic reports average invoices it paid in 2023 from $2,115 for water heaters to $3,441 for heating systems (company figures). It is usually not worth it if your home is new, still under a builder’s warranty, or if your appliances are already covered by manufacturer warranties. Below, we break down the real costs, what’s covered, and the honest case for and against a home warranty so you can decide for your situation.
Is a Home Warranty Worth It? Break-Even Calculator
Answer a few quick questions using your own numbers. We’ll tell you honestly whether a plan is likely to pay for itself — or not.
Advanced: average repair cost without a warranty
Default ($400) is an example value, not an average. Enter the repair cost you were quoted. Adjust it if you have a better local estimate.
This tool gives a directional estimate based on typical repair-frequency patterns for homes and systems of similar age, not a guarantee for your specific home. It does not account for your plan’s coverage caps, exclusions, or pre-existing condition clauses — always read the sample contract. See our rating methodology for how we evaluate providers.
Warranty or Emergency Fund? Compare Both
Some homeowners skip a plan and keep cash for repairs instead. This calculator compares the two using only the numbers you enter, so nothing here is a guess about your home. Use the prices in your own quote and your own repair estimates.
Warranty vs Emergency Fund Calculator
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What Is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of major home systems and appliances when they break down from normal wear and tear. You pay an annual or monthly premium, and in exchange, the company dispatches a technician and covers the repair cost (minus a small service fee) when something covered fails. It’s a separate product from homeowners insurance, which covers sudden accidental damage like fire or storms rather than gradual mechanical breakdown.
Home warranty companies sell plans in tiers, usually an appliance-only plan, a systems-only plan, and a combined plan that bundles both. Some also offer optional add-ons or “riders” for items like pools, spas, well pumps, or septic systems. Coverage limits, exclusions, and claim processes vary meaningfully between providers, which is why comparing sample contracts (not just marketing pages) before buying matters.
What Does a Home Warranty Cover?
Typically covered
- HVAC (heating and air conditioning) systems
- Electrical systems and wiring
- Plumbing systems, including water heaters
- Kitchen appliances: refrigerator, oven/range, dishwasher, built-in microwave
- Clothes washer and dryer
- Garage door openers
Usually NOT covered
- Pre-existing conditions the company can prove existed before the contract
- Cosmetic damage
- Improper installation or maintenance neglect
- Structural issues (roof, foundation) unless a separate rider is purchased
- Code violation upgrades required during a repair
For a closer look at one common claim, see our guide on whether a home warranty covers water heater replacement, or compare plans in our best home warranty companies ranking.
How Much Does a Home Warranty Cost?
Prices vary by company, state and plan. In the Old Republic brochures we read, a one-year plan for a single-family home cost $425 to $985 depending on the state and plan, plus a $100 trade call fee per visit. The exact price depends on the provider, plan tier, and your state. On top of the annual premium, you’ll pay that service call fee (also called a trade fee) every time a technician visits.
| Old Republic plan (one year, single-family home) | Annual price | Trade Call Fee |
|---|---|---|
| Arizona (AZ 7.2): Silver, Gold, Platinum | $480, $665, $785 | $100 |
| California (CA 7.1): Silver, Gold, Gold Plus, Platinum | $425, $585, $700, $850 | $100 |
| Texas (TX 7.0): Silver, Gold, Platinum | $490, $690, $985 | $100 |
These figures are general industry ranges. For provider-specific pricing, see our individual company reviews as they are published.
Two things move the price the most: your location (labor and material costs vary widely by state) and your home’s square footage, since larger homes often bump you into a higher pricing bracket. It’s also worth noting that the lowest advertised price is rarely what you’ll pay after taxes, processing fees, and optional add-ons are included, so always ask for the full, itemized annual total before signing.
The Case For a Home Warranty
1. Predictable budgeting
Instead of an unexpected furnace repair bill, you know your annual cost upfront. This matters most for homeowners on a tight or fixed monthly budget.
2. Convenience of one phone call
Rather than researching, vetting, and scheduling a contractor yourself, the warranty company dispatches a pre-vetted technician from its network.
3. Protection for older homes and appliances
If your appliances and systems are past their manufacturer warranty and showing age, the odds of needing a covered repair within a year go up significantly, making the math more favorable.
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4. Useful for landlords and first-time buyers
Landlords who don’t want late-night maintenance calls, and first-time buyers who haven’t yet built a home repair fund, often find the peace of mind worth the premium.
The Case Against a Home Warranty
1. Claim denials for “pre-existing conditions”
The most common complaint across the industry is a denied claim because the company determines the issue existed, or was caused by lack of maintenance, before the contract started. The FTC’s official consumer alert on home warranties covers this exact pattern and is worth reading before you sign.
2. You don’t choose your contractor
You’re limited to the company’s network, which can mean longer wait times and less control over repair quality compared to hiring your own trusted technician.
3. Payout caps
Contracts cap payouts per item, and the caps differ. In the samples we read, AHS (Texas) and 2-10 list $5,000 for most heating and cooling systems, while Old Republic lists no dollar limit on HVAC for homebuyer plans. If a full replacement costs more, you pay the difference out of pocket.
4. It can cost more than self-insuring
If your home and appliances are newer and well-maintained, you may pay the annual plan price (one-year Old Republic plans in the Arizona, California and Texas brochures cost $425 to $985) for a claim you never file. Setting that same money aside in a dedicated repair fund can leave you better off long-term.
How a Home Warranty Works, Step by Step
- You purchase an annual plan and select a coverage tier.
- A covered system or appliance breaks down.
- You file a claim online or by phone.
- The company assigns a technician from its network and you pay the service call fee.
- The technician diagnoses the issue and reports back to the warranty company.
- If approved, the company pays for the repair or replacement (up to the contract’s payout limit).
Response times vary by provider and region, so check when service starts in your contract before you buy. If the assigned contractor can’t make it out quickly and the issue is urgent, some providers let you hire your own licensed technician and submit the invoice for reimbursement, though this depends on the specific contract.
Home Warranty vs. Homeowners Insurance
These two are often confused but cover different things. Homeowners insurance covers damage from sudden, accidental events like fire, storms, theft, or a burst pipe. A home warranty covers breakdowns from normal wear and tear on systems and appliances, the kind of gradual failure insurance specifically excludes (see the Investopedia’s overview of home warranties for more detail). Most homeowners carry both, since neither one substitutes for the other, and mortgage lenders typically require insurance but never require a home warranty.
| Homeowners Insurance | Home Warranty | |
|---|---|---|
| Covers | Sudden, accidental damage (fire, storms, theft) | Mechanical breakdown from normal wear and tear |
| Required by lender? | ✓Usually yes | ✗No, optional |
| Typical annual cost | Varies by home value and location | Varies by company, state and plan (one-year Old Republic plans in the Arizona, California and Texas brochures: $425 to $985) |
Contract terms decide how much value a plan really gives you. Compare limits and exclusions in our Cinch Home Services review and our Old Republic review, and check your own agreement with the free contract decoder.
So, Are Home Warranties Worth It? Our Take
A home warranty is generally worth it for homeowners with aging systems or appliances and no large repair fund, and generally not worth it for new homes still under manufacturer or builder warranty. It tends to make financial sense if two or more of the following apply to you:
- Your home or its major systems/appliances are more than 3-5 years old
- You don’t have an emergency repair fund large enough to cover a major system repair
- You prefer predictable costs over managing repairs yourself
- You’re a landlord managing a rental property
It tends to make less sense if your home is new, appliances are still under manufacturer warranty, or you’re comfortable handling repairs and have savings set aside to cover them. If you decide a warranty is right for you, compare at least two or three providers’ contracts side by side, and read the fine print on exclusions before you sign. Start with our complete comparison of the best home warranty companies.
If you decide it is not worth it after signing, here is how to cancel a home warranty and what refund to expect.
Frequently Asked Questions
Should I get a home warranty for a new home?
Usually not immediately. New homes typically come with a builder’s warranty covering structural issues for the first year or more, and appliances carry their own manufacturer warranties. A home warranty becomes more useful once those coverages expire.
Can a home warranty company deny my claim?
Yes. Common reasons include pre-existing conditions, lack of proper maintenance records, or the issue falling outside your plan’s coverage. This is why reading the contract’s exclusions before buying matters.
How does a home warranty work with an existing home warranty from the seller?
It’s common for sellers to include a one-year home warranty as part of a sale. You can typically renew it directly with the provider once that first year ends if you want to keep the coverage.
Are home warranty plans worth it for landlords?
Many landlords find them worthwhile because they reduce the time spent coordinating repairs across multiple properties and provide a single point of contact for tenants to report issues.
What happens if I cancel a home warranty early?
Cancellation terms vary by contract. In the contracts we read, cancelling in the first 30 days brings a full refund (less the cost of any service request); after that the refund is pro rata, with a $50 processing fee at Old Republic and an administrative fee at AHS and 2-10. Read the cancellation clause before you sign, especially if you’re only testing a provider for one term.
Do home warranty companies negotiate or offer discounts?
Yes. Most providers run frequent promotions, such as a discounted first year, a free month, or a waived enrollment fee. It rarely hurts to ask for a better rate before purchasing, or to compare a quote against a competitor’s current promotion.
Want to see how specific providers compare? Check out our in-depth home warranty company reviews (published as they go live), or learn more about how HomeWarrantyScope researches and rates providers.