Home Warranty Prices in 2025: What Should You Expect?
Becoming a homeowner is an incredibly exciting—and expensive—time. There are so many different costs associated with the closing process that you may be left feeling a little intimidated to hear about anything else.
While home warranty plans will cost you, they can help you save in the long run. Below, we will dive into the basics of what a home warranty plan can do for you and some important things to consider if you plan to make the investment.
What Is a Home Warranty?
While many people are up to speed on what a warranty is, some may not have the slightest idea that there are warranties that can be added to the purchase of a home. Similar to a car or appliance warranty, a home warranty is designed to provide you with additional coverage and protection for major home systems and appliances that break down due to normal wear and tear.
It’s important to note that a home warranty differs from home insurance. Insurance is purchased to give homeowners peace of mind, knowing that their home and possessions will be protected in the case of an unexpected disaster or accident that impacts the home.
Warranties are for basic wear and tear that is bound to occur on any major home system or appliance and is an excellent investment for homeowners who may have dipped into their savings account to make the downpayment on their home, or aren’t wanting to drain their emergency fund all a singular costly fix in their new home.
What Does a Home Warranty Cover?
Home warranties cover many important things throughout your home and are a great option to consider. This is especially true if you plan on purchasing an older home where the appliances and overall systems have likely seen better days.
Important, large-scale systems throughout your home, like plumbing, HVAC, and air conditioning, are just some aspects that a home warranty may cover. These systems are necessary to live comfortably and can be incredibly expensive to fix if they go wrong, so it’s important to understand just how beneficial a home warranty can be.
If one of these systems were to fail and you have a home warranty, you'd only need to pay a service fee, which would be significantly less than the cost of repairing or replacing the system, and soon your home would be up and running again.
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Common Exclusions
While these warranties cover various household items and systems, there are some important exclusions to know about. One of the most important things to do is to have a thorough inspection done on your home during the purchasing process. Any preexisting conditions on the home, such as a faulty HVAC unit or damaged air conditioner, will not be covered by a warranty added on after the fact.
Warranties are available when you need them, but they cannot be used to address an existing issue. So, make sure you’re aware of the limitations before buying one.
How Much Does a Home Warranty Cost?
Warranty costs vary depending on various factors. When choosing to sign up for a warranty, you will have to choose the amount of coverage you would like to have and which service provider best suits your needs.
There are tons of great home warranty plans available at various costs, so you should be able to find what you are looking for.
While there is no set amount you can expect to pay, a general range for a basic home warranty plan is $300 to $700 per year. If, instead, you’re interested in a more comprehensive plan, you will likely have to pay a premium rate of $800 to $1200 per year.
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Lessening your use of large-scale appliances like your air conditioner can help reduce the service costs and repair fees associated with using your home warranty plan.
Factors Affecting Home Warranty Cost
The costs associated with home warranties vary to ensure that each homeowner can select coverage that suits their needs. Here are some of the more common factors that influence your price.
Type of Coverage
Warranty plans come in two basic types: basic and comprehensive. A basic plan will cover appliances throughout your home, while a comprehensive plan is more likely to cover systems and appliances. Basic plans are more affordable, but they do not cover repairs for some of the larger-ticket items, so it’s important to understand what’s included with the coverage you choose.
Size and Age of Home
Older appliances are more likely to break, as are appliances that are working overtime to service a larger home. Both of these factors indicate that a larger home and an older home will likely increase your home warranty costs.
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Service Fees & Location
Service fees will vary based on the type of fix required and where you are located. Labor costs change from city to city and are based on demand, so time of year and accessibility are also factors to consider.
Number of Covered Items
Some providers will allow you to build your coverage plan, meaning you choose which appliances or systems throughout your home you wish to have covered. This is a great way to control costs, as you can curate a plan that covers only the things you choose.
What to Consider When Buying a Home Warranty
Before you jump into anything blindly, here are some things you should take into consideration before investing in a warranty plan.
Coverage Details
Some coverage plans may offer way more than you need, resulting in overpaying for a service you won’t use. Take the time to talk with your chosen provider and work to really understand what’s included in your selected plan.
Monthly Costs and Service Fees
Your monthly fee is just one piece of the puzzle when it comes to out-of-pocket costs associated with home warranties. Service fees are another important cost to consider, as these are what you will be responsible for when it comes time for a provider to service your home. Lower monthly premiums may seem like a great idea, but they can ultimately lead to higher service fees, so be sure to take this all into account before signing anything.
Optional Add-Ons
Are you planning on having a pool installed down the line? Do you wish to renovate your home and add on additional appliances and systems that would need to be included in your coverage? If so, it’s essential to see if your chosen warranty plan will allow for add-ons in the future.
Cost vs. Potential Risk
Home warranties, similar to insurance plans, are meant to serve as a backup plan in case an appliance or system breaks in your home. While excellent investments for some, they may not always be necessary.
Before investing in a coverage plan, weigh out the risks associated with your appliances and systems in your home. If you have brand-new appliances and a brand-new home, the likelihood of spending money on repairs is much lower than if you were dealing with an older, more run-down property.
Warranties can be great contingency plans, but depending on your specific situation, they may not be worth the monthly cost.
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Frequently Asked Questions
When Should I Buy a Home Warranty?
If you are new to homeownership or are even looking for a way to increase the chances of selling your home, you may benefit from investing in a home warranty. New buyers are constantly searching for something to sweeten the deal, and including a home warranty with the sale of your home is a great option to entice buyers to finalize the deal.
Is a Home Warranty Worth the Cost?
A home warranty is very much worth the cost for homeowners. This added level of security can provide you with peace of mind, knowing that the basics of your home are covered with an added warranty. You will also greatly reduce the likelihood of having to dish out large sums of money to fix appliances all on your own.
Can You Negotiate a Home Warranty?
As with most parts of the home-buying process, you can absolutely negotiate a home warranty. If you’re in the position of buying a home and working directly with a seller, be sure to communicate that you wish to have a home warranty included in the final sale. If you’re selling your home instead, this is a great bargaining chip to incentivize buyers to make the purchase if they were on the fence before.
Final Thoughts
Home warranties are a great investment and can give you peace of mind, knowing your home is protected even if your major systems and appliances were to go down. Reading through this guide should set you up for success when talking to a potential home warranty provider about what you need and are comfortable paying for.
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