MarketWatch has highlighted these products and services because we think readers will find them useful. This content is independent of the MarketWatch newsroom and we may receive a commission if you buy products through links in this article.

Whether or not a home warranty is worth it is a question many homeowners ponder at some point, especially if their house’s systems or appliances are older or wearing down.

In order to help you make a wise decision, we discuss important factors to consider that are relevant to a home warranty purchase such as the cost of home repairs, the cost of a home warranty and the pros and cons of owning a home warranty.

In this article: 

  • What do common home repairs and replacements cost?

  • What is a home warranty?

  • What is the cost of a home warranty?

  • Pros and cons of a home warranty

  • Do I need a home warranty?

  • Recommended provider: American Home Shield

  • Conclusion: Are home warranties worth the money?

What do common home repairs and replacements cost?

In order to determine whether or not a home warranty is worth it for you, it is important to know what the cost of some of the most common home repairs and replacements are. The table below shows the cost of repairing or replacing some of these common items, according to House Method.

Many of the appliances and systems you need in your home are not cheap. This is especially the case when you have to replace them instead of repair them. Each of the five items in the table below costs at least $1,250 to replace, while the repair costs are at least $150. These are just a few of the many appliances and systems in your home that you might have to repair or replace, and it is not uncommon for multiple items to break down or need repairs in the same month. 

Cost of common home repairs and replacements

Cost to repair

Cost to replace

Washing machine

$310

$1,250

Air conditioner

$347

$5,413

Heating system

$285

$4,249

Refrigerator

$310

$1,250

Oven/range/stove/cooktop

$150

$1,675

What is a home warranty?

A home warranty is a service contract that gives homeowners a way to avoid expensive repair bills. For example, replacing your heating system would likely cost over $4,000. The vast majority of Americans would not have the money to replace this system if it broke in their home.

Instead of having to pay for repairs or replacements out of pocket, home warranty companies charge you a monthly premium and a service call fee every time you need a repair. In the heating system example we just used, you would simply pay your service fee (roughly $75 to $125) to have a certified technician come repair or replace your heating system.

Most home warranty companies will send a technician within 24 to 48 hours to repair or replace your system or appliance. Reputable home warranty companies operate their claims center 24/7 so they can get a repair person out to your house as quickly as possible. These companies also tend to provide emergency services in case an appliance or system needs an emergency repair.

By owning a home warranty, millions of homeowners have peace of mind that their appliances or systems breaking down will not also break their bank accounts. Similar to health insurance companies, home warranty companies do set their prices to an amount where it is probable that they will make more money off of your payments in the long run than they will spend servicing your home. However, most homeowners who own a home warranty are aware of this fact and still believe their home warranty is well worth it.

What is the cost of a home warranty?

The cost of a home warranty depends on a variety of factors, including the provider you purchase your warranty from and the specific home warranty plan you purchase. As mentioned before, home warranty companies charge you a monthly premium, which you pay every month.

They will also charge you a trade service fee, which you will only owe when you need a repair or replacement of your system or appliance.

The average cost of our three best home warranty providers’ monthly premium and service fees is listed in the table below. As you consider these companies for your home warranty needs, also consider factors such as each company’s state availability, breadth of coverage in each plan, quotes and claims processes and customer service. For more detailed information on each of these specific providers, consult our individual provider reviews, and learn about our methodology at the bottom of this story.

Provider

Our score

MarketWatch promo

Monthly premium cost

Service call fee

#1: American Home Shield Get free quote

95

$50 off

Appliance plan: $49.99 Systems plan: $49.99 Combo plan: $59.99 Build your own: $54.99

$75 to $125

#2: Choice Home Warranty Get free quote

91

$50 off and 1 month free

Basic plan: $36.17 Total plan: $43.85

$85

#3: Select Home Warranty Get free quote

89

$100 off and 2 months free

Bronze plan: $35.83 Gold plan: $35.83 Platinum plan: $37.50

$75

Pros and cons of a home warranty

Now that you understand what a home warranty is, the cost of a home warranty and some of the benefits of a home warranty, it is also helpful to know some of the cons of owning a home warranty. We created a pros/cons table for you to examine the pros and cons simultaneously. While you are looking at this table, consider your personal financial situation and whether it affects any of the pros/cons listed below.

Pros

Cons

Peace of mind: Gives you peace of mind that your systems and appliances will be covered when they inevitably break down. Financial stability: Provides financial stability when your systems or appliances break down. Network of professional service providers: Access to a network of experienced, licensed service providers for all of your systems and appliances, saving you the time of finding professional contractors for each of your needed repairs. Convenience: Only one phone number or website needs to be saved to file a claim on any appliance or system in your home.

Cost in the long run: You will probably pay a bit more in the long run by having a home warranty than not having one. This is how home warranty companies make money. Ability to pick your service technician: Many home warranty companies do not allow you to pick your favorite service technician, if you have one. Potential claim denial: If your system or appliance is being improperly maintained, your home warranty company may not cover it. Reasons for claim denials are detailed on a company’s sample home warranty contract, which is typically uploaded to its website. Exclusions: Home warranty companies’ plans only cover some appliances and systems, and some exclusions may apply. These are also detailed on a home warranty’s sample contract.

Do I need a home warranty?

Whether or not a homeowner needs to purchase a home warranty or not is a personal decision. Like choosing to not purchase health insurance, you are taking a gamble if you decide not to purchase a home warranty. You could potentially save money by not purchasing a home warranty, but it’s risky. 

To our review team, purchasing a home warranty is advisable for the vast majority of homeowners because they often don’t have thousands of dollars in savings intended for expensive, unexpected home repairs. On the other hand, for our readers who do happen to be very wealthy and have thousands of dollars in savings, it may not be worth it to buy a home warranty since it typically costs a bit more in the long run than not buying one. 

We realize that most of our readers need financial protection, and many want to know our opinion on the best home warranties in the industry. In order to help you find the right provider for your needs, we compiled a list of the best home warranties in the nation.

Below, we discuss our top-ranked provider, American Home Shield. We have included a link to the company’s quote form and the company’s phone number if you would like to contact this provider.

Recommended provider: American Home Shield

American Home Shield (AHS) is an excellent choice for your home warranty needs. We ranked this company as our top provider after examining over 20 other home warranty companies. 

Here are a few reasons we recommend AHS to our readers:

  1. First and most popular home warranty business: American Home Shield (AHS) was the first company to establish a home warranty business, and it has over one million customers nationwide. Almost one out of every two home warranty customers buys an AHS policy, and the company is a six-time defending champion of the Women’s Choice Award for the best home warranty.

  2. 24/7 claims and customer service: Offering 24/7 claims support and customer service, AHS is easy to do business with. The company responds to claims within 24 hours 98% of the time, which is much quicker than many other home warranty companies.

  3. Build-Your-Own plan: AHS offers a Build-Your-Own plan, which lets you cover the systems and appliances that are most important to you.

Get a free quote

You can get a free quote from AHS by calling the company at 844-529-9298 or by entering your contact information on the company’s online quote form.

Conclusion: Are home warranties worth the money?

Home warranties from reputable companies are worth it for most homeowners because they provide peace of mind that your expensive appliances and systems will be covered. When your systems and appliances break down, you will only owe a small service fee instead of thousands of dollars. You may pay a bit more in the long run by purchasing a home warranty than going without one, but millions of homeowners feel that the benefits are well worth the price.

Methodology

Because our consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best home warranty companies. This system accounts for a wide range of ranking factors, and we collected data on dozens of home warranty providers to grade the companies on each factor. The end result was a cumulative score for each provider, with the companies that scored the most points topping the list.

To ensure our research was as thorough as possible, we called every major home warranty provider directly and spoke with representatives to get quotes, specifics on coverage options, availability based on location and additional information. We also reviewed sample contracts to better understand what each plan covers and to identify limitations. In addition, we simulated the process of reaching out to each company’s customer service team to evaluate their level of helpfulness and ability to solve problems.

Once we had gathered all relevant data, we used the following scoring system to grade each home warranty company on a 100-point scale:

  • Overall plan options (5 points possible, weighted X5): Companies that offer a variety of plan options are more likely to meet consumer needs. Thus, we awarded more points to providers that offered more plans and greater flexibility.

  • Cost (5 points possible, weighted X5): Monthly fees and service fees are both taken into consideration. The lower the fees, the higher the score.

  • Trust (5 points possible, weighted X5): Customer feedback on third-party review sites was analyzed to gauge the reputation of each company. Points were deducted for companies that are currently facing or have recently faced civil lawsuits.

  • Customer service (5 points possible, weighted X2): This factor is based on the responsiveness, friendliness and helpfulness of a company’s customer service team.

  • State availability (5 total points possible): Most home warranty companies do not serve all 50 U.S. states. Providers that offer service in the most states scored the highest in this category.

  • Additional benefits (5 total points possible): Promotions and discounts are among the perks that can make a home warranty more attractive to consumers. Companies that offered benefits that competitors didn’t were awarded more points.

  • Coverage specifics (5 total points possible): While the total number of plan options is important, it is also essential to consider what is covered under each plan. The more comprehensive the coverage, the better.

All company data is monitored on an ongoing basis so that all rankings and information remain up-to-date.