Should You Buy a Home Warranty? Everything You Need to Know

Deciding whether to purchase a home warranty is a big decision for homeowners. Some see it as a lifesaver for unexpected repairs, while others find it unnecessary. So, is a home warranty worth it? The answer depends on your home, budget, and financial risk tolerance. This guide will walk you through what a home warranty covers, how it works, and real-life experiences to help you decide if it’s right for you.

What Is a Home Warranty?

Before diving into the details, let’s clarify a common misconception: a home warranty is not the same as homeowners insurance. While insurance covers major damages from disasters like fires or storms, a home warranty is designed to help homeowners with the cost of repairing or replacing household systems and appliances due to normal wear and tear.

What Does a Home Warranty Cover?

Most home warranty plans cover essential home systems and appliances, including:

• Heating and cooling (HVAC)
• Electrical and plumbing
• Kitchen appliances (refrigerators, ovens, dishwashers)
• Washers and dryers
• Water heaters

Some companies offer optional add-ons for:

• Roof leaks
• Pools and hot tubs
• Septic systems and wells
• Electronics

Certain reviews highlight the importance of checking a provider’s coverage limits and exclusions before signing up.

Of course, to help keep your home running smoothly, check out The Ultimate Home Maintenance Checklist.

How Does a Home Warranty Work?

Most companies typically operate on a one-year contract. Here’s how the process works:

• If the repair or replacement is approved, the warranty company covers the cost (minus the deductible).
• Choose a plan and pay either upfront or through monthly installments.
• Some providers have a 30-day waiting period before coverage begins.
• If a covered item breaks down, submit a service request online or by phone.
• Pay a deductible (typically between $75–$125 per request).
• The company assigns a service technician to diagnose the issue.

Why Consider a Home Warranty?

They can be beneficial in several situations:

• Sellers and buyers: Some sellers include a home warranty for buyers as an incentive, and buyers can negotiate to have one added to their purchase agreement.
• First-time homeowners: If you’re unfamiliar with your home’s systems, a warranty offers peace of mind while learning what needs maintenance or repairs.
• Budget-conscious homeowners: If an unexpected repair could strain your finances, a home warranty helps by spreading out potential costs over a year.

My Experience With a Home Warranty

You may be wondering, “What is the best home warranty?” While I can’t give a definitive answer, I can share my personal experience with American Home Shield.

The First Home

When I bought my first home in 2006, the seller included an American Home Shield policy for the first year. Within months, my water heater failed. The warranty covered a full replacement, and I only paid the $75 service fee. While I didn’t renew after that first year, it provided great value during my initial months as a homeowner.

Older Homes

In 2020, I bought a 15-year-old home with a well, septic system, and pool, all new responsibilities for me. To ease the transition, I purchased a home warranty again. The first year, it covered multiple costly repairs, including:

• Furnace and air conditioner breakdowns
• A faulty range
• A failed pool pump

We renewed the plan for the second year, which proved valuable once more:

• Dishwasher replacement
• Kitchen sink leak repair
• Well pump failure
• Another HVAC issue

The third year it covered a roof leak (I had the optional roof coverage), AC repairs, and a water heater repair.

For every claim I’ve made, they’ve come out quickly and have fixed the problems with no issues.

Are Home Warranties Worth It?

If you search home warranty reviews, you’ll find mixed opinions. Unfortunately, people often leave reviews when they have a bad experience, rather than when things go smoothly.

From my perspective, a home warranty was worth it when I had multiple expensive repairs in a short period. However, if you go a year without a major repair, it may feel like wasted money. Ultimately, the decision comes down to your personal financial situation and whether you prefer budgeting for small monthly payments or taking the risk of handling repairs as they come.

Final Thoughts

This type of coverage can be a smart investment if you:

• Are moving in to a new home and are unfamiliar with the systems and appliances
• Own an older home with aging systems and appliances
• Prefer predictable home maintenance costs
• Want peace of mind in case of unexpected breakdowns

However, it may not be necessary if you have a well-maintained home, a solid emergency fund, or prefer to hire your own repair professionals.