What is a Home Warranty?

It’s no secret that buying a house is an investment, and it’s one that you want to protect. By purchasing a home warranty, you know you’re covered should anything happen to your appliances or home systems.

What is a Home Warranty?

A home warranty is a service contract that pays for the repair or replacement of the appliances and home systems that are covered in the contract. These items typically include kitchen appliances, electrical, plumbing, and HVAC systems. These warranties do not cover any structural features of a home.

Is a Home Warranty Worth It?

The cost of a home warranty can be anywhere between $300 and $600 a year, sometimes, even more, depending on the type of coverage you require. A homeowner should also be prepared to pay a fee for service calls throughout the year (depending on the contract).

Without a home warranty, you could spend thousands of dollars repairing and replacing the systems in your home.

Average Approximate Replacement Costs

  • Central Air Conditioning: $3,799 – $7,582
  • Furnace: $2,799 – $6,756
  • Water Heater: $829 – $1,643

Costs via HomeAdvisor.com

Who Should Consider a Home Warranty?

Individuals purchasing a home that has been previously owned should consider a home warranty, especially if the home inspection revealed that the home systems and appliances are nearing the end of their lifespan.

When purchasing a home warranty, it’s important to understand the terms of the contract, how long the coverage lasts, and what it will and will not cover.

Pros & Cons of a Home Warranty


  • Peace of mind when purchasing a home with used appliances and older systems
  • The convenience of making a phone call to have an appliance or home system repaired or replaced
  • Alleviates the worry of hiring a trusted technician


  • Some companies have dollar limits per repair, per year
  • If the system or appliance hasn’t been properly maintained, the home warranty company may deny the repair/replacement request
  • Appliance and system repairs and replacements are not always covered depending on the circumstance
  • You may not have a say in what make or model of the replacement is

When purchasing a home warranty, be sure to do your research on the company you are purchasing the warranty from. When shopping around, look at the various premiums, exclusions, and caps on benefits.