Home Warranty Coverage Limits: A Homeowner's Guide

A home warranty plan helps protect your budget from unexpected repair or replacement costs when your home’s appliances and systems break down. Understanding home warranty coverage limits can help you get the most out of your plan. This plain-language guide walks you through how coverage limits work for HVAC and plumbing systems, appliances, electrical systems, water heaters, and more. The information we dive into here can help you become more familiar with the comprehensive home warranty coverage you have or the plan you purchase.

What Are Home Warranty Coverage Limits?

Simply put, a coverage limit is the maximum amount a home warranty company will pay to repair or replace certain covered items. Every home warranty plan has at least some coverage limits – or caps. For example, almost all home warranty plans have coverage limits on appliances.

Home warranty dollar limits work similarly to homeowners insurance. Your homeowners insurance doesn't provide unlimited coverage for claims – it sets or caps maximum payout amounts for the items defined in your policy. For example, your homeowners insurance may set a different dollar limit to cover a tree falling on your roof during a windstorm versus replacing the electronics and furniture that were damaged in the same storm.

Related: Home Warranty Coverage and Homeowners Insurance: Why You Need Both

How Coverage Limits Apply to HVAC, Plumbing, Appliances, and More

Coverage limits vary significantly between home warranty companies. As you compare home warranty plans, here are some of the generous coverage highlights in First American home warranty plans:

• Heating and AC systems have no total dollar limit on repairs or replacements.
• Appliances have some of the highest coverage limits in the industry.
• Electrical and Plumbing do not have coverage limits.
• Water heaters don’t have coverage limits in the Premium plan.

The table below offers an easy-to-view list of First American Home Warranty coverage limits:

First American Home Warranty Coverage Limits

First American home warranties also don't have annual dollar caps, meaning you can use your plan as much as needed throughout the year and your coverage will not “run out.” We also have no total limit for heating and AC system coverage, and our plans offer some of the most generous appliance limits. You can also add optional roof leak coverage to your plan, which is capped at $1,000.

Want to find out more about our plans? Visit our home warranty coverage pages.

How Do Coverage Limits Work?

Let’s say your covered refrigerator fails from normal wear and tear. Your home warranty takes care of the repair or replacement of your refrigerator if it can’t be fixed. If the cost exceeds the coverage limit, you are responsible for the amount over the limit. Thankfully, First American has high coverage limits for each appliance: $3,500 for Starter and Essential, and $7,000 for Premium.

Other Home Warranty Limits and Exclusions

Sometimes, when a covered system or appliance needs to be fixed or replaced, your home warranty may not cover everything. This can happen when modifications are needed to complete a covered repair or install a replacement system. For example, if we replace your air conditioner with a new system, it might require a larger electrical circuit or breaker upgrades that aren’t part of the covered repair or replacement. That portion of work would be your responsibility, even if there is no coverage limit or the amount is under the coverage limit.

Examples of Out-of-Pocket Costs

Using a water heater replacement as an example, below are some examples of what a home warranty might not cover:

• Code upgrades: A new water heater may need seismic straps, a drain pan, venting modifications, or other items required by building codes, but that are not part of home warranty coverage.
• Relocating plumbing or venting: If water, gas, or vent connections need to be moved because the replacement water heater has different dimensions or connection locations, those modifications are typically not covered.
• Platform or enclosure modifications: If cabinetry, closets, platforms, or surrounding structures need to be altered to fit a new water heater, those construction costs are typically not covered.

Home Warranty Coverage Helps Homeowners

The information we’ve covered in this guide is designed to help homeowners understand how limits work and provide guidance on how to read a home warranty contract. If you’re covered by a First American home warranty, it’s easy to view your contract via your online account in the Homeowner Center. And when you need us, our service process is simple; you can request help 24/7 from our network of prescreened professionals.

If you’re shopping for coverage, learn more about what our plans protect and how home warranties help protect your budget when the inevitable appliance or home system breakdown occurs.

Get a free quote from First American Home Warranty and see all the coverage and options available to you.

FAQs About Home Warranty Coverage Limits

What are home warranty coverage limits?

Coverage limits are the maximum dollar amount a home warranty company will pay to repair or replace certain covered items. If a covered repair or replacement costs more than your plan's dollar limit, you're responsible for paying the amount above that limit. Many home warranty companies also have annual or plan total dollar caps, which limit how much they will pay per contract term. First American home warranties don’t have total dollar limits, so you can use your plan as often as needed without worrying about “running out” of coverage.

Do all covered items have the same coverage limit?

No. Coverage limits vary by the item and the home warranty plan. At First American Home Warranty, appliance coverage limits vary by plan ($3,500 for Starter and Essential, and $7,000 for Premium). Heating, air conditioning, plumbing, and electrical have no total dollar limits.

Are coverage limits the same as exclusions?

No. Coverage limits cap how much a home warranty plan will pay to repair or replace a covered appliance or system, whereas home warranty exclusions determine when a repair or replacement isn't covered under your plan. Taking the time to review your home warranty contract before you file a claim can help you understand the coverage limits and exclusions that apply to your plan.

*Items listed may be optional or not available on some home warranty plans; please review the sample contract for specific coverage, terms and limitations.

†Please read your contract for specific coverage and limitations. In some instances, Homeowner and First American may agree to payment of cash in lieu of repair or replacement. Payment will be made based on First American's negotiated rates with its suppliers, which may be less than retail.