The cost of a home warranty is one of the most important factors for homeowners when considering whether they should purchase a home warranty. In this article, we take a close look at the costs of a home warranty and whether their value is worth the price.
Home Warranty Costs Summary
A home warranty costs between $300 and $600 annually on average, but your personal cost depends on a variety of factors, including the plan you purchase and the provider you choose.
Average monthly cost: $25–$50 per month
Average service fee: $75–$125 per repair visit
Minimum monthly cost: $20
Maximum monthly cost: $115
In This Article:
- What Is a Home Warranty And Is It Worth It?
- How Much Does a Monthly Premium and a Service Fee Cost?
- How to Buy a Home Warranty
- Recommended Provider: American Home Shield
- Frequently Asked Questions
Today’s Homeowner works with an independent reviews team to create evidence-based research that helps our readers make informed decisions. The reviews are always independent. For transparency, we may be compensated if you purchase through a link.
What Is a Home Warranty and Is It Worth It?
A home warranty is a service contract designed to protect you from expensive repairs needed when your home’s appliances or systems break down or need repairs. According to House Method, an air conditioner costs over $5,400 to replace and a heating system costs over $4,200 to replace.
With all of their other financial obligations, the vast majority of homeowners don’t have the money to foot bills such as these. With a home warranty, you instead pay a monthly premium and a service fee every time you need a repair or replacement.
Millions of homeowners purchase home warranties every year because of the peace of mind they bring. Because home warranty companies have to make a profit, most owners of a home warranty will probably pay more for a home warranty in the long run than if they had not paid for one.
Still, owning a home warranty is generally a wise decision for most people because it provides invaluable financial stability when a major appliance or system needs to be repaired or replaced in one’s home.
How Much Does a Monthly Premium and a Service Fee Cost?
|Name of Provider||Monthly Premium||Service Fee|
|American Home Shield||$50–$60 per month||$75–$125|
|Choice Home Warranty||$36–$44 per month||$85|
|Select Home Warranty||$35–$38 per month||$75|
Similar to paying for health insurance, a home warranty comes with a monthly premium and a service fee, which is similar to a deductible. The monthly premium is paid every single month, regardless of whether or not you need a repair. A service fee is different — it is only paid when you need a repair or replacement.
The cost of your monthly premium is dependent on the home warranty provider you select, the plan you select and any optional add-on items you choose to cover. Typically, the cost of a monthly premium ranges from about $28 a month to $75 a month.
Select Home Warranty offers some of the cheapest plans, offering its Bronze Care and Gold Care plans for about $35 per month each. American Home Shield (AHS), which earned the highest ranking by our review team, offers its ShieldSilver Plan™ at about $49.99 per month, its ShieldGold Plan™ at about $54.99 per month, and its ShieldPlatinum Plan™ at about $59.99 per month.
The cost of your monthly premium is important, but the amount and type of coverage provided for the price is what you should focus more attention on. For example, we think American Home Shield’s ShieldPlatinum Plan™ is excellent, even though it is more expensive than Select Home Warranty’s plans.
How To Buy a Home Warranty
If you are looking to buy a home warranty, we recommend reading our article on the best home warranties. Our research team examined every major home warranty provider in the industry on factors impacting their value to customers, including the strength of their cost, coverage plans, reputation and claims process. We also took notes on our experiences with the customer service department of each company to inform our rankings.
Based on this research, we found five providers that stood out among the pack: American Home Shield, Choice Home Warranty, America’s First Choice Home Club (AFC Home Club), Select Home Warranty and First American. Each of these providers has pros and cons, and some will be better for certain homeowners than others. For example, some of these providers may not be available in the state of your residence or may not cover an item that you need covered.
We encourage our readers to get a free quote from at least two or three of these providers so that you can compare their respective offers against each other. You can do so using the links below.
One of the home warranty providers we particularly recommend considering is American Home Shield, which graded out very well in our research team’s evaluation. In the section below, we explain the reasons why AHS performed so well in comparison to other home warranty companies.
Recommended Provider: American Home Shield
In our research team’s objective review of all the major home warranty companies in the industry, American Home Shield (AHS) came out as the top provider. The criteria we used to evaluate each provider included the strength of its coverage plans, cost, quotes and claims processes, reputation and customer service.
Every provider has its pros and cons, and you can read our review of American Home Shield to get the full scoop on its strengths and weaknesses.
Here are a few reasons we recommend AHS:
- 24/7 Claims and Customer Service: AHS operates a 24/7 customer service line and responds to claims within 24 hours 98% of the time, which is much quicker than most home warranty companies.
- Availability: American Home Shield offers coverage in 49 states, including all but Alaska.
- Reputation: The first and most popular home warranty company in the market, almost one out of every two home warranty customers buys an AHS policy. The company has also received the highest ratings among home warranty providers from other websites, including ReviewHomeWarranties.
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Frequently Asked Questions
Are home warranty plans worth it?
For most homeowners, yes. You will probably pay more money in the long run by owning a home warranty than not having one, but it provides invaluable financial stability when your home’s expensive appliances or systems break down or need repairs.
How much does a home warranty cost?
A home warranty typically costs between $25–$50 per month. Every time you need a repair or replacement, you will also need to pay a service fee that is usually between $75–$125.
Do home warranties cover pre-existing conditions?
This depends on the specific provider. American Home Shield, for example, covers undetectable, pre-existing conditions that could not have been identified by a simple mechanical test or by a visual inspection for missing or damaged parts.
What is the difference between a home warranty and homeowners insurance?
While a home warranty covers the cost of repairs and replacements to expensive appliances and systems in your home, homeowners insurance covers you from property damage caused by natural disasters and burglaries. It may also protect you if someone gets injured on your property.