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Our survey of 1,000 homeowners revealed that more than 75% had previously hired a contractor to repair a home system or appliance. Nearly 50% of those homeowners spent time locating a contractor through online research. If you’re looking to reduce the inconvenience of a system or appliance breakdown, a home warranty can help by connecting you directly with a contractor.
In addition to sourcing knowledgeable contractors, enrolling in a home warranty helps you account for unexpected expenses. This guide will walk you through choosing a cost-effective home warranty plan that fits your needs.
We based all pricing information used in this article on quotes for a single-family home smaller than 5,000 square feet in Genoa, Nevada, near Lake Tahoe.
The Most Cost-Effective Home Warranty Companies
Here are the most cost-effective home warranty companies:
- American Home Shield : Best for Comprehensive Coverage
- Liberty Home Guard : Best Add-on Variety
- Select Home Warranty : Best for Cost-Effective Plans
- America’s 1st Choice Home Club : Best Membership Perks
- First American Home Warranty : Best for Home Systems Coverage
- HomeServe : Best for Specific Needs
If you’re willing to pay a bit more for your monthly fees, American Home Shield offers some of the most comprehensive coverage options in the industry. Additionally, its generous coverage caps on built-in systems can help homeowners avoid many of the urgent and unexpected costs of homeownership.
If monthly premium flexibility is your priority, First American Home Warranty offers three service call fee options that change your monthly cost. You may be interested in HomeServe plan options if you’re looking for specialized coverage for items outside the typical scope of a home warranty plan, such as exterior utility lines.
How to Choose a Home Warranty
A cost-effective plan that provides the best value to a homeowner is not necessarily synonymous with the cheapest home warranty companies. With these services, the best way to get top value from your home warranty is to carefully review the terms and conditions and the covered items to confirm they align with your priorities. Follow these simple steps to choose a home warranty that meets your needs:
- Consider the most likely breakdowns to occur this year. Before you can decide if you want a plan that covers appliances or a plan that covers your systems (or both), you’ll need to take an honest look at the state of your home’s major systems and appliances. If you anticipate a big-ticket repair in the next few years, it’s a good idea to enroll in a plan before preexisting conditions develop.
- Don’t assume you need the most comprehensive plan. Most home warranty companies won’t cover items that have been improperly installed or modified or suffer from a preexisting condition. You’ll want to select a home warranty plan that covers the items least likely to be subject to typical exclusions. Making these considerations will confirm you’re choosing a policy that won’t be under-utilized.
- Request quotes from multiple providers. Before making your final decision, you’ll want to request quotes from a few of your top home warranty options. This process will allow you to compare and contrast the coverage items and terms of each provider’s service agreement.
Is a Home Warranty Worth It?
A home warranty could be worth it for the peace of mind it provides. For example, imagine you’re taking a shower after a long day. Suddenly, there’s no hot water. You discover that the water heater has broken. Though an unplanned cold shower is unpleasant, a home warranty can help you resolve the breakdown with minimal hassle. You simply file a claim and pay a minimal service call fee to start the home repair process.
After you file your claim, your home warranty provider will initiate a service request on your behalf, including matching you with a local, licensed contractor specializing in your repair need. Across the industry, providers typically initiate a service request within 24 to 48 hours of receiving a claim.
Which Home Warranty Has the Lowest Service Fee?
Our research of more than three dozen home warranty companies indicated that the industry’s average service call fee is roughly $77.
The service call fee is your responsibility each time you file a claim, so it’s important to weigh the amount you’ll be paying for a technician to diagnose the cause of the breakdown relative to the value of the covered item. If you’re expecting to cover primarily big-ticket items, a higher service call fee can allow you to lower your monthly premiums to a minimal expense.
Do Home Warranties Have Coverage Caps?
Any reputable home warranty company will provide homeowners with a copy of its service contract before they enroll in a plan. The fine print of home warranty policies will typically stipulate a coverage cap or limit. These coverage limits will outline the maximum dollar amount a provider will pay for a covered item. It does not mean you’ll always receive that coverage when you file a claim, but it does indicate the maximum potential coverage.
Do Home Warranties Cover Old Appliances?
It’s rare for a home warranty to exclude appliances based solely on their age; however, an older appliance may not be eligible for the same replacement value as a brand-new appliance. Therefore, the total coverage for an older appliance will be based on the pro-rated, depreciated value.
Frequently Asked Questions About Home Warranties
What is a service call fee?
A service call fee is similar to a deductible charged by an insurance company. Providers charge a service call fee each time you file a new claim. Service call fees range from $65 to $125, depending on your provider and plan selection.
What should I look for when buying a home warranty?
When buying a home warranty, you should look for three main factors: cost, coverage options, and exclusions. Every homeowner’s situation is different. Consider your budget, coverage needs, and any notable coverage exclusions before selecting a home warranty provider.
Who regulates home warranties?
State government bodies and industry associations regulate home warranties. Both entities work together to create laws that regulate companies. These regulatory bodies also offer consumer resources to improve home warranty experiences.
What does a home warranty not cover?
Home warranties typically don’t cover routine maintenance, appliance removal and disposal fees, or commercial property. We recommend reading your provider’s sample contract to determine what it covers or doesn’t cover in your policy.
How We Chose the Top Home Warranty Providers
Our team reviewed and researched dozens of home warranty providers, thoroughly analyzed sample agreements, and identified customer pain points based on our analysis of customer reviews and interviews with industry experts. Our in-depth methodology outlines our review process to provide transparent information about the companies we review.
We determined that the following factors are the most important when comparing home warranty companies: available plans, plan coverage, price range, industry reputation, customer support, and additional features. Our research supported that plan coverage, customer service, and industry reputation should carry the most weight. While important, the other factors should not have as much influence when choosing a home warranty provider.