Contributor, Benzinga
December 7, 2023

Looking for the quickest answer? Our top choice for home warranties is Choice Home Warranty.

A home warranty can help homeowners cover the cost of system and appliance repairs and replacements needed because of normal wear and tear. While a home warranty protection plan can help fill in some of the gaps left by your homeowners insurance, it’s important to know all costs involved with these policies.

Learn more about system and appliance plan warranty policies with Benzinga’s guide. You can choose the best home warranty company for your property, remembering that these plans should supplement home insurers.

Home Warranty Costs Explained

Home warranty plans come with a variety of expenses. As a homeowner, you’ll need to be aware of each of your plan’s expenses, when they come into play and who is responsible for paying each bill. Though plan expenses might vary by company, most plans include the following costs. 


If you buy insurance for your car or home, you’re already familiar with the concept of a premium. Your home warranty premium maintains your system or appliance warranty and is paid directly to the company issuing your home warranty. Most home warranty policies require you to make a premium payment each month but also allow you to pay for your premiums in one lump sum when you sign onto your policy. Remember, a home buyer or home seller could pay these premiums, depending on their agreement. A real estate professional may also purchase the plan to support their clients.

Service Fee

Each time you use your home warranty coverage, you’ll pay a service fee to the technician that visits your property. Though some home warranty companies refer to the service fee as your plan’s deductible, this isn’t correct because your service fee is due every time you call for a repair or replacement through your policy. This is different from a deductible you’ll find on a health insurance plan because after you pay the deductible, your policy costs do not change. The service fee is due every time you use your plan, and the amount due does not change depending on the value of the repair or replacement you receive. 

When a technician visits your home to provide you with the appropriate home repair or replacement, you’ll pay the service fee directly to him or her. The cost of your plan’s service fee will vary depending on the details laid out in your policy. Most home warranty policies include service fees that range between $75 and $125 per incident, and select companies allow you to choose your own service fee to adjust your premium expenses. Selecting a higher service fee usually lowers your premium costs and vice versa. 

Review your service contract to ensure that you know the repair costs that will be covered, how the product addresses massive repairs, how this plan fits in with your home insurance and is there are exclusions.

Expenses Above Policy Coverage Limits 

Every home warranty policy will include coverage limits that dictate the total value of repairs, replacements and diagnostic tests that your policy provider will pay for. As the homeowner, you will be responsible for covering any excess expenses left after you have met your coverage limit. 

Coverage limits drastically reduce the value of your home warranty coverage because they limit the situations when you can use your plan. For example, imagine you have a home warranty policy and your refrigerator breaks. After calling your home warranty company and speaking with a technician, you learn that the refrigerator is unrepairable and will need to be replaced. The total cost of the replacement is $1,500. If your home warranty policy has coverage limits of $1,000 per appliance, you will only receive $1,000 toward your replacement. You will be responsible for paying the remaining $500 on your replacement in addition to your service fee. 

Every home warranty plan will include limitations on coverage, and it’s important that you know them before you begin spending money on a policy. Before you sign onto a home warranty plan, be sure to review your contract. Make note of coverage limits on each item and make sure they are high enough to justify what the company is charging you every month for coverage. If you are having trouble finding a contract, don’t be afraid to contact the company and request information on policy limits.

Benefits of a Home Warranty

While you need to be aware of limitations on your home warranty policy before you invest in coverage, plans come with a number of benefits. Some of the biggest benefits that come with a home warranty policy include:

  • No age limit on homes: Many home warranty companies do not put an age limit on the systems and appliances they cover. This means that if you live in an older property that experiences more frequent breakdowns, you aren’t likely to be denied coverage because of the age of your home components.
  • Set repair costs: When you sign onto a home warranty plan, you’ll have a set and defined service fee. The service fee you’ll pay does not change depending on what’s wrong with your system or appliance or what is broken. If you’re a homeowner who appreciates easily anticipatable expenses, a home warranty policy can provide you with more control over what you’ll pay for home repair and replacement needs.
  • Peace of mind: If you’re on a limited monthly budget, the sudden expense of a broken air conditioning system, dishwasher or another home component can devastate your household finances. When you have a home warranty policy in place, you know that you’ll have a line you can call for a quick repair or replacement at a predefined price. For some homeowners, this can be worth the expense of the policy on its own. 

Home Warranty Plan Exclusions

When you purchase or use a home protection plan, you need to understand the exclusions that are inherent. First, most home protection plans will exclude:

  • Flooding
  • Major appliance replacement
  • Hot tubs or pools
  • Pre-existing issues

Remember, your warranty is unique, and you need to know if it covers the heating system, water damage, water heater, replacement costs, etc. This is why shopping around with Benzinga is such an important part of the process.

Who Needs a Home Warranty?

Homeowners who will benefit the most from a home warranty policy may include:

  • Homeowners living in older properties: Most home warranty policies do not include age limitations on systems or appliances in your home, which means it’s possible to buy a home warranty plan for an older property. Older home components tend to break down more frequently than newer ones, which means a home warranty policy can be beneficial.
  • Investment property owners: If you rent out an investment property, you have a responsibility as a landlord to make sure that any home components that break down are repaired quickly for your tenants. Most home warranty companies pride themselves on providing a technician to your home in as little as 24 hours after you place your initial service request. A home warranty policy can help you gain access to expedited repair and replacement services for your occupied units.
  • Homeowners without an emergency fund: A sudden home component repair or replacement can cost thousands of dollars. If you don’t have a home warranty policy, these expenses will fall entirely on your shoulders. With a home warranty policy, you’ll only need to pay your outlined service fee, which you can anticipate in advance. While a home warranty policy is not a replacement for a robust emergency fund, it can provide peace of mind while you work toward boosting your savings

Compare Home Warranty Policies 

From Choice Home Warranty to Select Home Warranty, there are dozens of home warranty policy providers operating throughout the United States. Each company’s policies include its own coverage limits, terms and inclusions so it’s important to compare multiple home warranty options before you choose a policy that’s right for your home. Make sure to request a sample policy from each home warranty company you’re considering before you sign up for coverage.

Benzinga offers insights and reviews on the following home warranty providers. Consider beginning your search for the right protection plan using a few of the links below. 

Frequently Asked Questions


How many years is a home warranty good for?


Most home warranty contracts include terms that are good for one year from the date of purchase. If you prefer a longer term, some home warranty companies provide you with a discount for prepaying for multiple years of coverage when you sign onto your policy.



Is offering a home warranty to a buyer worth it?


Offering a home warranty to a buyer can be worth it if you’re looking to incentivize more prospective shoppers to consider your property. A home warranty can be especially valuable if you’re having trouble moving out of an older property. Consult with your real estate agent if you believe adding a home warranty to your property sale might be worth the expense.


Can real estate professionals purchase a home warranty?


Yes, real estate professionals can purchase home warranties for the properties they represent, if they believe it will help their prospective clients.

About Sarah Horvath

Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.