Home warranties are service contracts that help homeowners afford costly repairs by paying set monthly or annual premiums. This may sound straightforward, but many people find themselves tangled up in the tricky contracts, cost factors, and often negative reputations that come along with home warranties.

If you’re a little unsure about how these service contracts play into modern homeownership, we’ve got you covered. This guide will provide stats and facts to help you understand all things home warranty.

Home Warranty Industry in 2022

Home Warranty Cost & Regulations Statistics & Facts

As of 2022, the home warranty industry has a market size of $3.6 billion. This number has increased gradually over the past couple of years, likely due to growing homeownership rates and increased time people spend at home resulting from the COVID-19 pandemic. Approximately 1.4 million out of the 5.64 million homes sold in 2020 had home warranty coverage.

As homeowners work, sleep, eat, and play at home, their systems and appliances are bound to suffer more wear and tear. Home warranties seem to provide the perfect solution for coverage of these frequently used home components. However, that coverage comes with a cost. The following sections will discuss average costs and deductibles in the home warranty industry.

Average Home Warranty Cost & Deductibles

The average home warranty combo plan costs around $600-$700 per year, depending on the coverage, location, and home type. These plans provide coverage for a home’s systems and appliances.

  • Appliance-only coverage typically costs around $500.
  • Systems-only coverage typically costs around $550.

Home warranty deductibles, or service call fees, typically range from $50 to $125, depending on your plan. The higher deductible you select, the lower your monthly premiums will be. Companies without plan customization have service fees averaging $75 per visit. According to Review Home Warranties, nearly 50% of home warranty companies charge a $75 deductible.

Home Warranty Regulations

Home warranty companies operate under different laws and regulations depending on the states they’re in. The federal government allows states and jurisdictions to set their own laws for service contract regulation. If those rules don’t technically violate federal law, home warranty companies can operate how they please without major consequences.

In other words, many home warranty providers have different regulatory bodies from their competitors. For this reason, home warranty regulations can be hard to pin down.

Although state-by-state regulation is tricky for many service contract providers, some associations are trying to make a difference. The National Home Service Contract Association (NHSCA) is a nonprofit trade organization aiming to standardize home warranty contractors through universal regulations and provider support.

NHSCA mission statement:

“The members of the NHSCA are reputable, licensed home service contract providers in good standing, domiciled in various states across the nation. All members adhere to a strict Code of Ethics which promotes sound and ethical business practices. The purpose of the Association is to nurture the home service contract industry and its use by the public nationwide.”

If you’re concerned about the legitimacy of a home warranty provider, look for an NHSCA Company Code. These six-digit codes indicate that the NHSCA accredits it as a reputable, professional, and experienced provider.

The following home warranty companies have NHSCA accreditation:

Home Warranty Scams

Untrustworthy home warranty companies exhibit a few common red flags such as:

  • Misleading marketing
  • Confusing policy terms
  • Delayed refunds
  • Frequent claim denials
  • Poor communication
  • Slow repairs
  • Rude service technicians

Review Home Warranties assessed 1,525 home warranty complaints to find the cause of dissatisfaction. It found that around 50% of customers experienced either poor communication or repair delays from their selected provider.

It also found that out of 443 online home warranty reviews, 36% of comments mentioned technicians refusing repairs after the deductibles were paid. Nineteen percent of customers reported repair delays after they paid the deductible. This means the contractors essentially took the repair money and ran with it.

Home Warranty Coverage Statistics & Facts

What Do Home Warranties Cover?

Between 2019 and 2020, the average household expenditure on home equipment rose from 3.3% to 3.8%. Home warranty contracts help people afford this inflation with set monthly payments and broad coverage.

However, home warranties don’t encompass everything. The tables below show what these plans do and don’t cover.

Home warranties DO cover normal wear and tear on items like:

Home SystemsHVAC Electrical
Water heaters
Ceiling fans
Air ducts
Home AppliancesDishwashers
Clothes washers
Ovens and stovetops
Trash compactors
Garage door openers
Add-OnsSump pumps
Septic pumps
Central vacuums
Roof leaks
Additional appliances

What Do Home Warranties NOT Cover?

Home warranties DON’T cover:

Cosmetic ProblemsDents, scratches, or other purely cosmetic issues that don’t affect the item’s functionality.
Appliance MisuseIssues that result from you using the appliance for something other than its intended purpose.
Improper InstallationDamages that occur because a system or appliance wasn’t installed by a certified professional.
Maintenance NeglectIssues that arise from lack of system or appliance maintenance (i.e., your dishwasher motor breaks because you never clean out the drainage filter.)
Pre-existing ConditionsProblems present before you signed up for home warranty coverage.
Costs That Exceed Your Coverage LimitAny expense that goes beyond your contract’s coverage limit (i.e., if your limit is $1,000 and your repair costs $1,200, you’ll pay $200 out of pocket.)

Home Warranty Vs. Homeowners Insurance

Despite their similar names, home warranties and homeowners insurance policies differ entirely. The table below shed’s light on each contract’s purpose, what they cover, and how much they typically cost.

Home WarrantyHomeowners Insurance
What It IsA home warranty is an optional contract that homeowners can buy to cover costly home repairs. Coverage applies to individual repairs, not large-scale perils.A home insurance policy is a required contract that a homeowner must purchase to cover their home’s interior, exterior, liabilities, and personal property.
What It CoversHome appliances and system damage caused by normal wear and tear

Replacement needs resulting from everyday use
Damage to the home from natural disasters, theft, extreme weather, or house fires

Legal and medical fees if someone is injured on the property
Average Yearly Cost$600-$700$1,500-$3,000

How Much Can Be Saved on Home Repairs?

According to the United States Public Interest Research Group, the average family could save over $330 per year by repairing existing items instead of replacing them. With home warranty coverage, the potential savings are even higher.

Repair Costs With and Without Home Warranty Coverage

A typical homeowner pays between 1% and 4% of their home’s purchase price in major repairs each year. This percentage includes maintenance costs and expenditures to outfit a home with the necessary equipment.

Luckily, a home warranty can make routine home repairs more affordable. Landmark Home Warranty provides cost estimates for common home repairs with and without home warranty coverage:

ItemRepair Cost Without CoverageRepair Cost With Coverage
Washing Machine$310$60-$100
AC System$350$60-$100
Water Heater$560$60-$100
Electrical Switch$150$60-$100
Electrical Panel$1,000$60-$100

As you can see, the costs for repairs with a home warranty plan are all in the same price range. This is because you’ll pay the deductible – or service call fee – of around $60-$100 for each repair. Otherwise, the premium you pay each month covers your repair costs.

Depending on your selected plan, your service fee could be higher or lower than this range.

Average Life Span of Home Appliances and Systems

The life span of systems and appliances is important for you to know. These ranges give you an idea of how long it’ll be before you need to replace your items. Before these time periods run out, repairs may be all you need to get your equipment up and running smoothly.

Here are the average life expectancies of home components according to the National Association of Certified Home Inspectors:

Home SystemsAverage Life Span (Years)
Air conditioner11
Toilets 50
Whirlpool tub35
Ceiling fans8
Air ducts80
Water heater9
Well pump15
Sump pump7
Waste pipes65
Home AppliancesAverage Life Span (Years)
Washing machine10
Clothes dryer13
Garbage disposal12
Trash compactor6
Garage door opener13
Central vacuum20

Final Thoughts

The numbers show that people spend a lot on home repairs and replacements. However, data also points to the fact that home service contracts can help homeowners save on these expenses. Even if the savings aren’t huge compared to the contract’s cost over time, these plans are still a good budgeting tool for homeowners struggling to put aside savings for inevitable service needs.

Before purchasing a home warranty, do your research. We suggest looking at the NHSCA’s list of accredited providers to find a reliable company with years in the industry. Otherwise, read online reviews to see how real customers feel about their service. These comments are often honest, allowing you to see different providers’ good, bad, and ugly qualities.

If you’d like the lowdown on some of the best providers in the game, check out our home warranty reviews page for more information.

Frequently Asked Questions

Do Home Warranties Have a Deductible?

Home warranties have deductibles that are referred to as service call fees. Service fees are the out-of-pocket amount you’ll pay whenever a certified technician visits your home to complete a repair. Service call fees generally range from $50 to $125, depending on your chosen company and plan. Some providers, like American Home Shield, allow plan customization. In this case, you can select a higher per-service deductible for lower monthly premiums and vice versa.

Is It a Requirement To Have a Home Warranty?

Unlike homeowners insurance, home warranty plans are completely optional. Your choice as a homeowner is to acquire a home warranty contract for potential discounts on systems and appliance repairs.

If you choose not to purchase a plan, you’ll pay for repairs and services out of pocket – so make sure to save accordingly.

What’s the Difference Between a Home Warranty and Home Insurance?

Unlike homeowners insurance, home warranty plans are completely optional. Your choice as a homeowner is to acquire a home warranty contract for potential discounts on systems and appliance repairs.

If you choose not to purchase a plan, you’ll pay for repairs and services out of pocket – so make sure to save accordingly.

A home warranty is an optional contract that homeowners can buy for coverage of home appliances and systems repairs. Home warranty companies offer these plans to help homeowners save on unavoidable damages caused by normal wear and tear.

A homeowners insurance policy is a mandatory contract that ensures coverage of a home’s structural components, personal property, and liability costs if someone is injured on the premises.

How Long Do Home Warranties Typically Last?

Home warranties are typically year-long contracts that the policyholder can choose to void or renew when the period ends. Many providers auto-renew contracts at the end of a policy period, so keep track of your purchase date if you don’t want to continue with coverage.


Editorial Contributors
Elisabeth Beauchamp

Elisabeth Beauchamp

Senior Staff Writer

Elisabeth Beauchamp is a content producer for Today’s Homeowner’s Lawn and Windows categories. She graduated from the University of North Carolina at Chapel Hill with degrees in Journalism and Linguistics. When Elisabeth isn’t writing about flowers, foliage, and fertilizer, she’s researching landscaping trends and current events in the agricultural space. Elisabeth aims to educate and equip readers with the tools they need to create a home they love.

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Roxanne Downer


Roxanne Downer is a commerce editor at Today’s Homeowner, where she tackles everything from foundation repair to solar panel installation. She brings more than 15 years of writing and editing experience to bear in her meticulous approach to ensuring accurate, up-to-date, and engaging content. She’s previously edited for outlets including MSN, Architectural Digest, and Better Homes & Gardens. An alumna of the University of Pennsylvania, Roxanne is now an Oklahoma homeowner, DIY enthusiast, and the proud parent of a playful pug.

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