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Home Warranty Cost

How Much Does a Home Warranty Cost?

 average costMedium: Policies Generally Run $250-$600 
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Also called a home service contract or a home service warranty, a home warranty is not an insurance policy, but rather a contract to service, repair or replace specifically listed household systems (such as plumbing or heating) and appliances -- the kinds of mechanical breakdowns not covered by homeowner's insurance. In some areas it may be customary for the seller and buyer to split the cost of a home warranty, but most often a warranty is paid for by the seller or real estate agent, to make the property more attractive to potential buyers and to avoid calls about problems after the home is sold.

Typical costs:

  • A one-year home service warranty can run anywhere from $250-$600, depending on what's covered and the deductible charged for each service call (which can vary from $30-$100). Less-expensive home warranties strictly limit the systems and appliances covered; and it costs more for a warranty covering items such as air conditioning, a pool, a spa, the roof or a well pump.
Related articles: Homeowner's Insurance, Selling a Home, Unclogging a Toilet, Replacing a Toilet, Replacing a Water Heater

What should be included:
  • It's important to remember that a home service warranty does not cover damage to your home; it only provides repair service to specifically covered systems and appliances, and nothing else. If any home system (such as a water pipe) or covered appliance breaks or stops working while your home warranty is in effect, you call the home warranty company, which sends out a repair provider it has under contract. You pay the deductible (and any other fees specifically excluded under your warranty), and the warranty company pays all other repair costs. However, a warranty may cover the cost of repairing a leaky pipe, but not any water damage caused by the leak. The National Home Service Contract Association answers frequently asked questions about home warranties and cautions against unlicensed or unscrupulous companies.
  • After you call the warranty company, it can take an average of 3-5 days before a repair person shows up at your home. Plus, repair claims under a home warranty might be entirely denied because of improper maintenance, code violations, unusual wear and tear, or improper installation. Because home warranties are contracts and not insurance, they are not regulated closely in most states. Homeowners' reviews are mixed. A Maryland house seller[1] is glad he bought a home warranty while his house was on the market; when the furnace died he only had to pay $50 (instead of $3,000) to have it replaced. and a Georgia homeowner had his claim completely denied. If you got the warranty when buying your home and a claim is denied, some experts recommend asking your real estate agent to assist in resolving the dispute.
  • An Ohio real estate agent who describes himself as a "buyer's advocate" discusses the pros and cons[2] of home warranties, and says that although he has recommended them to sellers in the past, he is seriously rethinking the value of home warranties.
Additional costs:
  • Many home warranties start when the house is sold. There could be an extra charge of $50-$100 or more for a warranty covering both the seller (while the home is on the market) and the eventual buyer.
  • Read the fine print: many home warranties do not include the cost of removing and hauling away old equipment (such as a furnace), or the cost of building permits if needed. Spas and pools are typically not included unless specifically requested.
Shopping for a home warranty:
  • The National Home Service Contract Association, which represents several large companies, provides a list of its member companies. Your real estate agent may recommend a particular home warranty company, but be aware that some agents receive a small commission (usually $50-$75) for every home warranty sold.
  • Ask to see a sample copy of an agreement before buying a home warranty and read the fine print to be sure you understand exactly what is and isn't covered. Check whether the company has any complaints on file with the Better Business Bureau[3] , which also provides a list of cautionary steps[4] to take before buying a home service warranty.
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