Do Home Warranties Save You Money? How Coverage Protects Your Budget

Buying a home is one of life’s most rewarding milestones, providing a valuable financial asset and a place to call your own. On the flip side, you shoulder a significant monetary burden when you become a homeowner. From property taxes to homeowners insurance to a mortgage and perhaps HOA fees, it all adds up. And that’s not counting any home improvements and renovations you undertake, and the routine maintenance and seasonal upkeep your house requires.

It’s no wonder that owning a home is one of the biggest investments you’ll make — and one of the biggest responsibilities you’ll have. That’s why homeowners often search out ways to save money around the house. From tackling home maintenance projects to lowering the thermostat a few degrees during wintertime, it’s easy to save here and there.

But what happens when a major home appliance or system unexpectedly breaks? Repairing a broken furnace or HVAC system can be costly, and replacing one can be a significant financial burden. That’s where a home warranty comes in. When covered items break, your home warranty can help ease the financial burden of paying for repairs and replacements on your own. But just how do home warranties save money? Read on to learn how home warranties can help provide a financial cushion for home buyers and seasoned homeowners alike, and the valuable peace of mind coverage brings.

Budget Preservation

Disciplined budgeting may be a popular way to save for emergency home repairs, yet while building up your savings helps, you can still experience financial uncertainty. Repairing broken home appliances and systems can cost anywhere from a few hundred dollars to several thousand, depending on the type of repair. And when these items cannot be fixed, paying for replacements can create a significant financial strain. Because breakdowns are unpredictable, you could save diligently yet still face a large repair bill that exceeds what you’ve set aside, leaving your budget vulnerable to surprise expenses.

Fortunately, a home warranty from First American can provide a more predictable and lower out-of-pocket cost — especially for expensive appliance and system failures. That’s why a home warranty is like having a safety net for your household budget.

Plus, you don’t need to spend countless hours trying to locate a trustworthy technician on your own — we’ve done that for you.  When a covered household item breaks, you simply submit a service request online or by phone, and we’ll assign a prescreened technician to come to your home to diagnose the issue. If the item cannot be repaired, we’ll replace it.*  You only pay a service fee when submitting a claim (plus any costs for non-covered issues).

Protection from Aging Equipment Breakdowns

When you consider the average lifespans of typical home appliances and systems, the real savings potential of home warranties shines through.  That’s because most household items are designed to last for only so many years. Through normal wear and tear, they eventually break, and repairs can only take you so far. At some point, you’ll have to replace your dishwasher, oven, washing machine, dryer, and other items you rely on every day to keep your household running smoothly.

While you may have set up a routine home maintenance schedule or personal maintenance manual to keep track of your home’s upkeep, it’s hard to know what preventative maintenance previous owners may have performed. When an aging appliance or system needs to be replaced, and you don’t have to pay for it, savings can add up quickly. Even if your dishwasher breaks the very day you move into your new home, a First American home warranty will come to your rescue.

Cost Containment

“Containing costs” means keeping your expenses under control so they don’t grow beyond what you can comfortably afford. Regular home maintenance can help prevent small issues from escalating into larger, costlier problems. But sometimes, even the best home maintenance planning can’t keep an appliance or home system from failing.

Home warranty coverage offers homeowners a convenient, budget-friendly way to gain better control over appliance and system repair costs — and even replacement costs, if needed. It helps prevent large, unexpected bills from throwing your finances off track. What’s more, because a First American plan allows you to use your home warranty as often as you need, you could potentially save hundreds to thousands of dollars each year.

Financial Stability

As a new homeowner, building an emergency fund may seem like a daunting task, especially after buying furniture and decorating your new space. You may also have several home improvements planned, along with various maintenance and repair projects. And while you might be disciplined enough to charge ahead with a savings plan, a broken dishwasher could derail your plan and put your budget into a tailspin, especially if you end up having to replace your appliance.

Home warranty coverage can mitigate that risk, helping your savings stay on track and supporting your financial stability by reducing the burden of repairing or replacing broken household items on your own. View our Budget Protection table to see average appliance repair costs for popular home systems and appliances that First American covers. 

The bottom line? The out-of-pocket costs you might pay with a home warranty, compared to what you would pay without one, can add up to substantial savings. Coverage also protects your budget from common seasonal pricing spikes. If your HVAC system fails in the heat of August, your repair bill without home warranty coverage would likely reflect summer price surges. The same goes if you have to replace your entire unit, which could set you back many thousands of dollars. Even your best efforts at summer seasonal home maintenance probably can’t save an AC unit that’s on its last legs.

Home Warranty ROI

Home warranty return on investment (ROI) compares what you pay for a home warranty plan to what you would spend out-of-pocket on covered repairs and replacements if you didn’t have coverage. What drives home warranty ROI? One factor is the number of claims — the more claims you place, the higher your ROI. However, taking into account the cost of repairs and replacements for major appliances and systems, even placing just one or two claims per year may produce a positive home warranty ROI.

Your home warranty ROI could also rise when high-cost appliances and major systems like HVAC, plumbing, or electrical fail. The expense to repair or replace even just one of these covered items can often strain a household budget. Another factor is the age of your appliances and systems — the older they are, the more a home warranty can pay off when they break.

Pro tip: When selecting a home warranty plan, be sure that it doesn’t cap the number of claims you can submit annually. And check that it covers appliances and systems regardless of age. First American home warranty plans do not have claim caps and will cover appliances and systems no matter how old, as long as they're in working condition at the beginning of the contract.

Get Coverage for Your Home — Benefits Add Up

First American home warranty plans cover essential household items you use every day to keep your household running smoothly.  You can also add coverage upgrades and options to protect unique features of your home, like water softeners, pools/spas, and more.

Our plans also come with exclusive member benefits that begin on Day 1 of coverage. Benefits offer immediate value and extra ways to save — including generous discounts designed to help simplify homeownership. It’s easy to set up your online homeowner account to access your benefits.

If you’re just moving into your new home, your member benefits also include re-keying the locks, providing even more savings while keeping you and your belongings secure. Learn more about home buyer coverage in our real estate home warranty plans.

Already a homeowner? Learn about our home warranty coverage for homeowners and the peace of mind it offers.

FAQs About Home Warranty Budget Protection

How do home warranties save money?

By reducing what you’d normally pay out of pocket, a home warranty can help preserve your budget, provide financial stability, and help you contain household costs. Coverage helps keep unexpected breakdowns from straining your finances and helps you avoid costly surprises.

What are average appliance repair costs?

It’s easy for an unexpected repair bill to derail your monthly budget. Find average appliance repair costs for home systems and appliances that First American covers in our Budget Protection table. As you’ll see, a home warranty can deliver significant savings when you consider the cost of repairing or replacing broken items on your own.

How does home warranty ROI work?

Fixing HVAC, plumbing, and electrical issues can cost hundreds of dollars, and replacing these systems can run into the thousands. When repairs are covered by a home warranty instead of coming out of your pocket, you get instant value from your plan. Typically, the more you use your coverage, the higher your home warranty ROI, yet sometimes even a single high-cost repair or replacement can positively impact your ROI.

Why choose First American Home Warranty for coverage?

A home warranty can save you hundreds or even thousands of dollars per year. For more than 40 years, First American Home Warranty has been helping homeowners protect their household budgets from costly repair and replacement costs when covered appliances and systems break. With a vast network of prescreened technicians and a variety of comprehensive plans, we help keep homes running smoothly, rain or shine.

*Please read your contract for specific coverage and limitations.