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A home warranty protects your major home appliances and built-in systems. When a covered item breaks down due to normal wear and tear, your home warranty will cover the cost of repair or replacement. All you have to do is file a claim and pay a service call fee, and the home warranty company will send a qualified service technician to your home to diagnose and fix the issue.
Any homeowner can purchase one of the best home warranties, but it can be an especially smart investment if you’re buying a new home, selling your home, or living in an old house. You might also opt for one when the manufacturer’s warranties on individual appliances expire or the builder’s warranty on a new-construction home ends. In this article, we explain how to buy a home warranty plan, including determining your coverage needs, comparing quotes, and reading the fine print.
Steps to Buying a Home Warranty
With dozens of companies and plans available, shopping for a home warranty—also known as a home protection plan—may seem overwhelming at first. However, the process can be fairly simple if you take it one step at a time. Here’s what to do.
1. Determine Your Coverage Needs
Start by identifying your coverage needs. Do you want protection for your major appliances, your home systems, or both? You may want to check if any of your appliances are still covered by a manufacturer’s warranty before deciding. Then, consider additional coverage. Do you have anything else you would like covered that’s not included in a standard plan, such as a pool or a guest house?
Once you know what type of home warranty coverage you want, anticipate how much coverage you’ll need. Different companies and plans have different coverage limits. For instance, one plan might cover each appliance up to $3,000, while another only covers $500 per appliance.
2. Research Home Warranty Companies
Next, research the companies that offer home warranties in your state. Be as detailed and thorough as possible. Consider setting up a spreadsheet to organize your findings and compare options.
You can request quotes in the next step. For now, focus your research on factors other than pricing, such as the following:
- Company websites. Click through the main pages of the company’s website. As you browse, note any standout features or red flags you see. Pay particular attention to information about coverage limits, exclusions, and how the claims process works.
- Sample contracts. Many home warranty companies have a sample contract posted somewhere on their websites. You can use this document to check coverage caps, exclusions, and other important terms and conditions.
- Customer reviews. Browse customer reviews for recurring issues and common praises. Sites to check include Google Reviews, Trustpilot, and BestCompany.
- BBB ratings. The Better Business Bureau (BBB) posts accreditation status and official BBB ratings for most companies on its website.
3. Gather Quotes
Now that you’ve done your homework, it’s time to request personalized quotes. You may already have a strong idea of which company can best meet your needs. However, it’s wise to obtain quotes from at least three different providers.
Once you have your quotes, take a moment to compare them. In addition to the monthly premiums, check the service call fee. Compare quotes, coverage terms, customer reviews, and anything else important to you before choosing.
4. Read Your Final Contract Closely
Even if you’ve already read a sample contract, it’s important to read through your final home warranty contract carefully. Don’t sign until you have read all the fine print. You may see details that did not show up in your earlier research. Some companies, for instance, do not disclose their service call fees until the final contract is drafted.
Plans also differ in what they exclude, so look out for any exclusions outlined in the contract. For example, some plans require you to submit maintenance records before the company will approve your claim. Many exclude preexisting conditions, regardless of whether you knew about them.
If everything looks good, complete the sign-up process and make your first premium payment to secure your coverage.
What Does a Home Warranty Cover?
Home warranties can cover major appliances, home systems, or both. Most do not cover structural elements, cosmetic components, and duplicate appliances, such as an extra washer or stand-alone freezer. Most companies offer two or three plans to fit different coverage needs.
Generally, home warranties cover issues that arise from normal wear and tear. They do not cover damage or breakdowns caused by a natural disaster or pest infestation, nor do they cover theft or vandalism. Misuse and modifications typically lead to a denial of coverage. Your claim may also be denied if the object in question was improperly installed or poorly maintained.
Do I Need a Home Warranty?
Most mortgage lenders will require you to purchase homeowners insurance to cover their investment. Though not typically required, home warranties can be a worthwhile investment for homeowners.
Some home warranties are purchased during a real estate transaction. A home seller might buy a home warranty as an extra incentive for buyers, or a home buyer might request that the seller pay for a home warranty. Home buyers can also purchase a warranty themselves during or after the sale.
Other homeowners can purchase home warranties, too. If you have older appliances or a home with outdated systems, home warranty coverage can help you pay for the inevitable repairs or replacements without dipping into your emergency fund. Plus, the home warranty company will automatically connect you with a qualified, prescreened technician, saving you the hassle of finding a contractor yourself.
Learn more: Are Home Warranties Worth It?
Our Top Home Warranty Provider
Several home warranty companies offer comprehensive coverage and competitive pricing, but American Home Shield (AHS) is our top pick for most situations.
American Home Shield offers three plans. Pricing varies by location, but homeowners have some control over their premiums. AHS allows you to set your service call fee at $100 or $125 and will adjust your premium accordingly. The higher your service call fee, the lower your monthly premiums will be. Below is information about each plan:
- ShieldSilver: This plan covers your HVAC system, electrical systems, and plumbing. Pricing can be as low as $29.99–$49.99* per month, depending on your location.
- ShieldGold: This plan covers all the home systems covered by ShieldSilver plus several laundry and kitchen appliances. Pricing can be as low as $49.99–$69.99, depending on your location.
- ShieldPlatinum: This plan includes a few exclusive or enhanced benefits, including a higher per-appliance coverage limit and roof-leak repair coverage. Pricing can be as low as $79.99–$99.99, depending on your location.
All AHS home warranty plans include discounted home maintenance services and access to a nationwide network of prescreened contractors. Its plans cover several things that most home warranties do not, such as improper installations, duplicate appliances, and undetectable preexisting conditions. AHS also covers items regardless of their age or maintenance history.
For an extra fee, homeowners can add coverage for electronics, pools and in-ground spas, guest units, septic pumps, and well pumps. Roof-leak repair is also available as an add-on with the ShieldSilver and ShieldGold plans.
*Price ranges are from quotes we requested for a 1,600-square-foot home in Bowling Green, Virginia.
Learn more: American Home Shield Review
Get a quote: Get your quote from American Home Shield
Our Recommendation
When shopping for a home warranty, there are a few steps you should take before signing on the dotted line. First, determine your coverage needs. Then, research the top-rated home warranty providers and compare quotes from each company. Finally, read your contract carefully before signing.
We recommend starting your research with American Home Shield. Its comprehensive plans make it a good fit for most homeowners. However, you should gather quotes from at least three providers to find the best coverage for you.
Buying a Home Warranty FAQ
Is it too late to buy a home warranty?
Generally speaking, it’s never too late to buy a home warranty. Some companies limit their coverage on older appliances or exclude preexisting conditions, though, and most require a 30-day waiting period before coverage kicks in. That means if something breaks before you purchase the warranty or during the waiting period, it won’t be covered.
What are the cons of a home warranty?
The cons of a home warranty include the following:Coverage limitations and exclusionsPremiums and service feesLack of control, input, and flexibilityWait times and waiting periods
Is a home warranty worth it for a seller?
Yes, a home warranty is usually worth it for a seller. A good warranty can benefit you if something breaks while you are in the process of selling your home, and it can provide peace of mind for potential buyers. Purchasing a transferable home warranty is an especially good idea if you are selling an older home or a home with older appliances.
When do I need to buy a home warranty?
In general, the sooner you buy a home warranty, the better. That way, you can get the 30-day waiting period out of the way. If your home is new or has all-new appliances, you might be able to hold off or purchase a plan that only covers major home systems.
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 analysis of customer reviews and interviews with industry experts. Our in-depth methodology guides our review process to provide transparent information about the companies we review.
During this process, we determined that the most critical aspects of a home warranty company include available service plans and add-ons, depth of coverage, plan cost, industry reputation, customer support infrastructure, and additional features. We also focused on the ability to choose your own contractor, upgrade your coverage package, transfer your plan to another owner, and cover roof leaks, high-end appliance brands, ceiling and exhaust fans, and faucets and fixtures.
Our research supported that plan coverage should carry the most weight, with customer support as the second-most important factor. Industry reputation, plan availability, and additional features were rated equally. We determined that price range, while worth considering, should not be the primary basis for choosing a home warranty provider for your home’s needs.
