What Is a Home Warranty? Coverage, Cost, and Benefits

Home systems and appliances don’t last forever, and when they inevitably break, repairs can be costly — and replacements even more so. That’s what makes home warranty coverage a popular choice for new and long-time homeowners alike. Typical plans can cover essential home appliances and systems, providing budget protection when they break due to normal wear and tear. You can find many different home warranty plans and upgrades to choose from, making it easy to select the right coverage for your budget and home.

But how does a home warranty work? And what does it cover? What are typical home warranty costs, and how can you determine if a home warranty is worth it? Read on to learn more about home warranties and their benefits.

What Are Home Warranties?

A home warranty is a service contract between a homeowner and a home warranty company. It can help cover the cost of repairs and replacements when covered home appliances and systems break due to normal wear and tear.

Homeowners pay a plan fee either monthly or annually, depending on the home warranty plan. Besides basic coverage, many companies offer coverage options and upgrades that provide extra layers of protection. For example, if you have a pool, you could add pool/spa coverage to your home warranty plan. First American Home Warranty offers many options and upgrades so homeowners can match their coverage to their home’s unique features.

Is a Home Warranty Different from Homeowners Insurance?

It’s easy to confuse a home warranty with homeowners insurance, and that misunderstanding often ends up costing homeowners both time and money when appliances and systems unexpectedly break down.

The fact is, homeowners insurance and home warranties are different products and cover different risks:

• Homeowners insurance covers natural disasters such as fires, floods, and storms, as well as theft and other major catastrophic events.
• Home warranties cover everyday home appliances and systems such as dishwashers, ovens, ranges, cooktops, plumbing and electrical systems, and more.

With both, you get solid protection inside and out, which is why many homeowners have home warranty coverage in addition to homeowners insurance as part of a comprehensive home protection plan. Together, these two products help address different parts of homeownership, from everyday breakdowns to catastrophic damage. While a home warranty helps manage the cost of covered repairs and replacements, homeowners insurance helps protect against major covered losses that could otherwise become financially overwhelming.

Learn more about homeowners insurance vs. home warranties and why you need both.

How Does a Home Warranty Work?

With a First American home warranty, it’s easy to get help when covered appliances and systems break. Here’s how our service process works:

• Submit a service request via phone or online and pay your service fee.
• We’ll assign a prescreened independent service provider from our network to set up an appointment with you.
• The technician will diagnose the issue and confirm with us that the repair is covered under your contract.
• Once coverage has been confirmed, the broken item will be repaired. If parts must be ordered, the technician will return at a later appointment. (You don’t pay any additional service fees for subsequent appointments, but you may have to pay out-of-pocket costs if the repair incurs any noncovered expenses.)
• If the item cannot be repaired, we’ll replace it*

Home warranty coverage can help homeowners avoid costly repair and replacement bills.

What Do Home Warranties Cover?

A home warranty covers many major appliances and systems you use every day to keep your household running smoothly, and can include:

• Heating and cooling: ductwork and heating, ventilation, and air conditioning (HVAC)
• Electrical: circuit breakers, electrical wiring, light switches, and outlets
• Plumbing: plumbing systems, stoppages, toilet tanks and bowls, fixtures, water heaters, garbage disposals, sump pumps, and pressure regulators
• Household appliances: built-in microwaves, dishwashers, ovens, ranges, cooktops, trash compactors, kitchen range hoods and vents, refrigerators, plus washers and dryers

Please review the sample contract for specific coverage, terms, and limitations.

What’s Not Covered by a Home Warranty?

While home warranties cover many essential systems and appliances, they don’t cover everything. Here’s what’s usually not covered by a home warranty:

• Cosmetic damage
• Pest damage
• Damage caused by misuse, neglect, and acts of nature
• Items still under a manufacturer’s warranty
• Solar energy systems
• Propane systems

Keep in mind that plans may offer optional coverage for certain home systems and appliances, like septic systems, pool/spa equipment, water softeners, and window AC units. Review all your coverage options before deciding on the plan that works best for you.‡

How Much Does a Home Warranty Cost?

Your home warranty cost will depend on the home warranty company, the plan, where you live, and the level of coverage. Optional coverage add-ons and upgrades will increase your cost, but on average, home warranties cost around $55 per month. First American Home Warranty offers plans starting at $33 per month.

Without home warranty coverage, the cost to repair or replace a home’s appliances and systems falls entirely on the homeowner. In some cases, a single major repair or replacement can offset the cost of coverage in just one year. Over time, your home warranty coverage could save you hundreds or even thousands of dollars, making coverage a smart financial decision. What’s more, a First American home warranty includes unlimited service requests per year, allowing you to contact us for help as often as needed.

Related: View typical repair and replacement costs for appliances and home systems without coverage (HomeGuides).†

Are Home Warranties Worth it?

A home warranty can be a worthwhile investment for managing repair costs for covered home systems and appliances. Especially if you own an older home with aging systems and appliances, the financial protection that home warranties provide can be enormous. Home systems and appliances often have shorter lifespans than people think. Plus, you don’t always know how well previous owners may have maintained these household items.

If you’ve recently moved to a new area, or don’t want to have to manage repairs on your own, the convenience and peace of mind a home warranty offers are often reason enough to choose coverage. Whenever a covered system or appliance breaks down, a simple service request can be all it takes to start the repair/replacement process.

Protect Your Home With a Home Warranty

For many homeowners, the value of home warranty coverage comes from the financial protection and convenience of a streamlined solution for repairs and replacements. While no home warranty plan can eliminate every out-of-pocket cost, a home warranty can help make unexpected home repairs more manageable and potentially save you money over time.

Ready to learn more about First American Home Warranty’s comprehensive coverage and benefits? Get a free quote today and see how we can help protect your home and budget.

FAQs About Home Warranties

What is a home warranty?

A home warranty is a service contract that provides a convenient, budget-friendly repair/replacement solution when covered home appliances and systems fail due to normal wear and tear. Coverage can include many major items you use every day, such as dishwashers, ovens, ranges, cooktops, plumbing, and more. Coverage options and upgrades are available to provide additional layers of protection.

How does a First American home warranty work?

When a covered appliance or system fails, simply submit a service request via phone or online, and we’ll assign a prescreened service provider to diagnose the issue. Once we confirm coverage, we’ll repair the broken item. If it cannot be repaired, we’ll replace it.*

How much does a home warranty cost?

Your home warranty cost typically depends on the home warranty company you use, your plan, the level of coverage, and where you live. You can enhance your coverage with add-ons and upgrades that will increase your cost, but on average, home warranties cost around $55 per month. First American Home Warranty offers plans starting at $33 per month. In some cases, a single covered repair can offset the cost of your home warranty contract.

Is a home warranty worth it?

Home warranties offer budget protection and peace of mind when covered home appliances and systems fail. And you don’t need to find help on your own. For many homeowners, that makes home warranty coverage a valuable part of their overall home protection plan.

* 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. Please review the sample contract for specific coverage, terms and limitations.

† Cost data is from research and project costs reported by HomeGuide members. Items listed may be optional or not available on some home warranty plans; please review the sample contract for specific coverage, terms and limitations.

‡ Be aware of non-covered costs even with your home warranty coverage. Please review your sample contract for specific coverage, terms and limitations.