If you’ve ever bought a home, you know that homeowners insurance is part of the deal. Unfortunately, your homeowners insurance policy doesn’t extend to the valuable systems and appliances in your home. Depending on your policy, it also may not cover damage to your roof or HVAC system. A home warranty can help you fill some of the gaps in your homeowners insurance policy and provide protection for your home’s most expensive systems that goes beyond the usual bounds of limited-peril coverage.
But what should you look for in a home warranty policy and what exactly do these policies cover? We’ve created a quick guide that includes the best home warranty companies in the U.S.
Quick Look: The Best Home Warranty Companies
- ACF Home Club
- American Home Shield
- Home Warranty of America
What’s a Home Warranty?
A home warranty is a contract that covers repairs and replacements on your home’s systems and appliances. Home warranties differ from home insurance policies in a number of ways, mostly in regard to what they cover and what circumstances warrant a payout.
Difference Between Home Warranty and Home Insurance
When you purchased your home, you may have been required to buy a homeowners insurance policy by your lender as a condition of the sale.
A homeowners insurance policy provides financial compensation for accidental damage done to your home. The types of accidents that warrant a payout are usually referred to as perils.
Some of the most common types of perils include fires and burglaries, electrical storms and some other types of natural disasters. Most homeowners insurance policies include a deductible. This is a set amount you pay for your damages before your insurance takes care of the remainder of the bill.
For example, let’s say that you have a kitchen fire in your home that causes $5,000 worth of damage and you have a homeowners insurance policy with a $500 deductible. After you file a claim with your insurer, an inspector assesses the damage and approves your claim.
Then, your insurance company deducts your deductible from your total payout and writes you a check to finish repairing the damage. Most homeowners insurance policies include coverage for the interior and exterior of your home as well as your possessions. Most policies also have a limit on the amount you can recover for items you own.
Home Warranty Policies
What if your HVAC system or plumbing system just stops working? What if your damage isn’t caused by a natural disaster or burglar?
In these instances, you’ll need a home warranty policy if you want any assistance paying to repair your systems.
Home warranties are service contracts that ensure the repair or replacement of home appliances and systems within a certain period of time. You don’t have to prove that a covered peril caused your heating system to stop working.
Home warranties cover repairs due to general use and aging as well as more dramatic accidents. Home warranties are usually sold in 12-month contracts. You can also buy appliance add-ons through many home warranty providers.
Most home warranty contracts include a nominal flat service charge per visit to discourage nuisance calls.
Let’s say that you wake up sweating one day because of a broken air conditioning system. Call your provider if you have a home warranty to get a licensed repair technician to diagnose the problem and make the necessary repairs.
If the repair technician determines that the system is broken beyond repair, he or she will arrange for a replacement system to be installed for just the cost of your service charge.
Types of Coverage
If you have homeowners insurance, you probably already know that there are multiple types of home insurance policies, ranging from liability coverage to dwelling coverage.
In the same way, there are also multiple types of home warranties. Some of the most common home warranties you may want to purchase include:
Appliance plans. As its name suggests, appliance plans cover your home’s major appliances. Most appliance plan providers lay out the appliances covered under the service contract when you choose a policy. They often include appliances like your washing machine, dryer, dishwasher, refrigerator and more.
Though most appliance plans don’t extend to small appliances like blenders and food processors, you may be able to add on small appliance coverage with certain companies.
Systems plans. Systems plans cover the systems that keep your home running, including your HVAC system, plumbing, electrical wiring, mounted air conditioning systems, etc.
These may include tune-ups and regular maintenance or they may be limited only to repairs or replacements, depending on your policy provider.
Combination plans.These offer you protection for both your appliances and your systems for one convenient price.
How Much Does a Home Warranty Cost?
Unlike homeowners insurance, mortgage lenders never require borrowers to purchase home warranties. As an optional form of coverage, home warranties are usually less expensive than home insurance packages. They range in price from $300 to $600 a year.
Certain homeowners can expect to pay more for their coverage depending on what types of appliances are in their home. For example, if you need your pool or spa to be included on your home appliance coverage, anticipate paying a little more.
Your warranty usually includes a service charge. A service charge is a flat amount you pay per instance for every breakdown or repair that you need.
Your service charge may be included on your plan in lieu of a deductible or in addition to it. Make sure to read through your entire policy before you lock in. Understand how much you’ll be responsible for paying if something in your home needs to be repaired.
Tips to Help You Pick Out the Best Home Warranty Company
With so many options, choosing a home warranty can be difficult. Look for these three factors when comparing plans to find the one that’s right for you.
You can’t choose a plan unless you know exactly which of your systems and appliances are covered under your warranty. Look for a plan that provides clarity about what’s covered and what isn’t. Avoid companies whose representatives use too much confusing language or industry lingo to describe what you’re paying for.
There’s nothing worse than having your HVAC system break down, believing that you’re covered and finding out that your home warranty only covered a fraction of the cost.
Look for home warranty policies with generous maximum payouts — especially if you live in an older home.
Most home warranty plans will include a washer/dryer set, but what about your sauna or that new blender you bought?
Customizable plans can help you make sure that everything you want protection for is covered, and they help you avoid paying for appliances and systems that your home doesn’t have.
Our Picks for the Best Home Warranty Companies
Now that you know what to look for in a policy, it’s time to start comparing plan providers. Read on to learn more about some of our favorite home warranty providers to kick off your search.
AFC Home Club
AFC Home Club is a home warranty provider that offers a wide range of customizable plans and contracts for homeowners. You can choose from one of four warranty plans, each of which covers a defined set of appliances and systems.
You can also go with AFC’s all-inclusive platinum plan, which includes protection for a wide combination of home appliances and systems.
AFC Home Club also offers additional coverage add-on policies for pools, sump pumps, tankless water heaters, sewage systems and more.
AFC focuses on customer service and satisfaction. Its online claims reporting system is easy to use, and you can request a quote online in as little as a few minutes.
AFC’s customer service center is available 24/7 and it guarantees its technicians’ parts and labor for as long as your plan’s membership lasts. Coverage from AFC Home Club is available in most states, with the exception of California, South Carolina and Hawaii.
American Home Shield
Another long-standing home warranty provider, American Home Shield offers combination policies from as little as $55 a month depending on location.
Tts team includes over 15,000 technicians and service specialists across the United States.
American Home Shield is an outstanding choice if you have something unique you want to protect.
The company offers a unique “Build Your Own” plan option that allows you to pick and choose specific appliances and systems you want to protect.
Affordable coverage, clear policy limit and inclusion charts and coverage available for everything from your HVAC system to your doorbell, American Home Shield is a strong contender for the title of best home warranty provider.
Home Warranty of America
Home Warranty of America specializes in providing homeowners with plans as soon as possible.
Its 24/7 customer service and online quote process speed up the quest for home warranties.
Plans are available from a little over $50 a month.
HWA also offers a massive range of additional protections for pools, spas and water softeners you can add on to your plan for less than $12 each.
You won’t need to order a home inspection to secure a policy from HWA.
Its terms have no restrictions on the age and condition of appliances under your warranty.
Chances are that HWA has a plan that suits your needs.
Protect Your Investment With a Home Warranty
Planning ahead for some of the most common issues can help you protect yourself financially in the event of an emergency. Having a home warranty isn’t required but it can be smart, especially if you live in an older home or you don’t stay as up-to-date with your home maintenance as you should.
Just like when you’re shopping for home and auto insurance, make sure you get a few quotes and thoroughly read all policy options before you choose a company.