Home Warranty

· 2 min read
A home warranty is a service contract that covers the repair or replacement of major home systems and appliances — it’s not insurance, but it…

A home warranty is a service contract that covers the repair or replacement of major home systems and appliances — it’s not insurance, but it works kind of like it.

When your HVAC dies in August or your water heater gives out on a Sunday morning, a home warranty means you call one number and pay a service fee instead of scrambling to find a contractor and paying full price. Coverage typically lasts one year and costs $400–$600 annually.

The seller often pays for the first year as a closing incentive. Smart move on their part — it means you won’t come knocking about that 15-year-old furnace.

What Does a Home Warranty Cover?

Standard plans typically cover:

  • HVAC systems (heating and cooling)
  • Plumbing and electrical systems
  • Water heater
  • Kitchen appliances (oven, dishwasher, garbage disposal)
  • Washer and dryer (sometimes optional)

Premium plans add roof leaks, pool equipment, and septic systems for an extra $100–$200 per year. Each service call runs $75–$125 out of pocket.

On a $350K home, replacing an HVAC system costs $5,000–$10,000. A $500 warranty with a $100 service fee looks pretty good by comparison.

Watch out for: Coverage exclusions and pre-existing conditions. Most warranties won’t cover problems that existed before the policy started — and they’ll send an inspector to check. If your home inspection flagged an aging furnace, the warranty company will likely deny that claim. Read the fine print, especially the section on “known defects.” The home buying process gives you a chance to negotiate these details.

Is a Home Warranty Worth It?

It depends on the home’s age. Buying a 20-year-old house with original appliances? A warranty makes sense. Buying new construction with manufacturer warranties still active? Probably not.

The math is simple: if you’d struggle to cover a $3,000–$8,000 surprise repair in your first year of homeownership, the warranty buys you predictability. Factor this into your overall budget using our affordability calculator.

Can I buy a home warranty myself after closing?

Yes. You don’t need the seller to provide one. Companies like American Home Shield, First American, and Choice Home Warranty sell directly to homeowners. Compare at least three quotes — coverage varies more than you’d expect. Just make sure you buy it before something breaks, because filing a claim on day one of your policy is a great way to get denied. Most plans have a 30-day waiting period before coverage kicks in. Check your closing costs to see if the seller already included one.