Is Buying a Home Warranty Plan Worth it? Here’s What the Numbers Tell Us
Key takeaways:
Is a home warranty* worth it?
If you’re a homeowner unsure about what home warranties cover or whether home warranties are even worth it, this is an important article to read.
According to a recent report from insurance firm Hippo, homeowners spent an average of $6,000 on maintenance and repairs annually. A separate study from home services website Angi that measured similar 2022 costs shows maintenance averaged $2,467 and home emergency spending — i.e., an unexpected repair — was $1,953 on average ($4,420 altogether). Source
Unlike homeowners insurance, mortgages don’t require a home warranty, so getting one typically isn't on the must-do list when purchasing a home or reviewing your insurance coverage. On top of that, a lot of people get confused by the terms of homeowners insurance vs. home warranty, but our guide can help you clear up any questions you might have.
However, going without a home warranty could be an expensive gamble because home insurance doesn't cover the same things. If you’re unsure what a home warranty covers or how it differs from an insurance policy, it’s tough to decide whether it’s worth the extra cost. But going without its protection could prove to be a costly mistake.
Is it worth buying a home warranty?
If you own a home, you have probably asked yourself whether a home warranty is worth it. You also may wonder which kind of home warranty makes the most sense for you and your home. Most often, we think of home warranties as something for recently purchased homes or if you live in an older home, and that’s true - just not always. Home warranties can do much more:
- Help people lower out-of-pocket costs for repairs and maintenance
- Attract homebuyers by showing the property has been cared for
- When in need, find good contractors faster
Bear in mind that home warranty companies are all different and offer varying warranty structures and benefits. Responsible homeowners need to consider more than just direct costs when making the best decisions for their budget and homes.
How much does a home warranty cost (on average)?
Once you’ve decided that you’re ready to invest in a home warranty plan, the next step will likely be figuring out if you can afford one or not. Luckily, you’ll have many options to choose from as you dive into your home warranty journey.
According to homeguide.com, a home warranty plan typically costs $35 to $60 per month for a standard plan and a higher level plan has an average cost of $50 to $110. Meanwhile, the average service visit fee ranges from $75 to $125. It’s important that you choose a plan that fits your needs and budget. So, shop around until you find the one that’s right for you.
How much will a home warranty save you on household repairs and replacements?
Major appliance repair could cost you hundreds to thousands, but a plan from Cinch Home Services can cost as little as $30.99 per month (pricing varies by location and plan selected). While costs vary based on where you live and the coverage you need, the potential expense of replacing one of the major appliances your family relies on daily could outweigh the monthly payments on an annual warranty plan.
With all this said, the savings on household repairs and replacements can be significant. It’s hard to calculate the average savings because the amount will vary depending on the type of plan, the deductible and the broken-down item. For example, replacing a dishwasher costs $970 on average, whereas the average cost to replace an A/C system is $5,880. Whether a repair or replacement is needed, you're likely to pay much less to get items covered by a home warranty back up and running.
With home warranty coverage, when something goes wrong with a covered item, you may only need to pay your deductible instead of absorbing the entire repair cost. Plus, the warranty company connects you to a qualified contractor when you make a claim, so you don’t need to worry about overpaying for the repair or getting shoddy service.
On top of offsetting upfront repair costs, a warranty plan helps add some predictability into future repair or replacement costs when a covered item breaks down. It makes sense to put money aside every month to save for either regular or unexpected home repairs, and a warranty service contract is one way to ensure you allocate some of your budget to home repair every month.
Even newly built homes, which sometimes come with builder home warranties (that don’t usually cover appliances), can require unexpected repairs soon after moving in. Investing in a home warranty plan could save you money on the upfront repair costs of your home’s systems and appliances and can make you money when it’s time for you to sell your home.
Repair costs vs. warranty costs
One of the first things to consider with a home warranty is the cost of the warranty versus the cost to repair or replace items in your home without a warranty. It might help to list everything you depend on in your home, like major kitchen appliances, water heaters, and plumbing systems. In addition to their age, keep track of their condition, normal wear and tear, and any existing manufacturer warranties or extended warranties that apply.
From there, you can determine how likely you think each item will require repair at some point and the urgency to repair it. For example, you might be able to live without a dishwasher for a bit, but could you live without your furnace in the middle of winter or air conditioning in the middle of summer? Then compare the cost of a warranty versus the cost of replacing something outright and the deductible involved. Repair costs can be expensive, but you can often save yourself money over the long term with the right warranty.
Home repair and replacement cost examples
When you start putting your list together, you want to know the average prices to repair or replace major appliances and systems in your home. There are a few websites that can help with this. Still, we’ve listed some typical costs for big-ticket items below:
| Covered Appliance/Systems | Average Replacement | Average Repair | Website Source |
|---|---|---|---|
| A/C System | $5,880 | $399 | HomeAdvisor |
| HVAC | $7,000 | HomeAdvisor | |
| HVAC | $8,000 | HomeGuide | |
| Heating System (Furnace) | $4,716 | $313 | HomeAdvisor |
| Electrical System | $1,473 | $346 | HomeAdvisor |
| Plumbing System | $1,182 | $331 | HomeAdvisor |
| Plumbing System #2 (includes inside water lines) | This site lists various types of plumbing costs. | HomeGuide | |
| Inside Drain/Sewer Line | $696 | HomeAdvisor | |
| Inside Gas Line 1 | $550 | HomeGuide | |
| Inside Gas Line 2 | $548 | HomeAdvisor | |
| Outside Sewer Line (Main Line) | Depends on various factors | HomeAdvisor | |
| Oven | $2,000 | $220 | HomeAdvisor |
| Refrigerator | $1,500 | $400 | HomeAdvisor |
| Water Heater | $1,250 | $600 | HomeAdvisor |
| Clothes Dryer | $1,000 | $180 | Fix & HomeAdvisor |
| Clothes Washer | $1,109 | $300 | Porch & HomeAdvisor |
| Dishwasher | $970 | $230 | HomeAdvisor |
| Microwave | $603 | $150 | Porch & HomeAdvisor |
Understanding what is covered and how your home warranty works is crucial. It is important to treat your home warranty plan the same way you treat every contract that you sign with a business for services. In other words, it’s essential to read the terms and conditions and ensure that you’re getting the warranty protection that you need.
For instance, if you recently purchased an older home and you’re worried about your A/C unit failing, having a home warranty plan that covers your A/C system is essential. Or maybe you are part of a family that heavily depends on the washer to keep the household functioning smoothly. This may be especially true for a family with several children who depend on their clothes for school and sports uniforms weekly. In this case, washer and drying protection may be the most important part of a home warranty plan.
With the right home warranty company, you can look forward to getting your washer and dryer fixed or replaced in a timely manner. Remember to take your time and comb through what your plan offers before you sign a contract.
Research the offers before making a choice
There’s immense power in shopping around. It enables you to see your options and allows you to truly choose a deal that works for your home and your budget. The home warranty business is rapidly growing, with companies nationwide for you to choose from. So, while it may seem complicated to read through several offers and understand how plans may differ, ensuring that you’re not wasting money is worth it. Here are some helpful tips before deciding on a home warranty company:
- Experience matters: How long has the company been in business? Don’t settle for a get-rich-quick scheme.
- Know what you want: Know what your home needs most and choose a plan that best fits your needs.
- Don't overpay: Stay true to your budget, and don’t be afraid to ask for discounts. You may be surprised at all the offers to help you save money.
Related Article: Buying a Home Warranty (Guide)
Be prepared when needed to use your home warranty
Just because we have access to things, it doesn’t mean we always make the best use of them. Do you agree? Well, when you purchase a home warranty plan, make sure you’re ready to take advantage of it when you need it most. Remember, one of the main benefits of having a home warranty plan is knowing exactly who to call when your home appliances and systems stop working. In other words, your home warranty company will have a network of qualified, certified technicians to save you from having to research, call around or ask friends and family for advice.
This can help you save time, money and give you the added peace of mind you desire. In fact, many home warranty companies have apps that make it easy for you to file a claim, submit a service request and get answers to your questions without having to call customer service at all.
Remember the main purpose of a home warranty
Home warranties are annual service contracts. When you sign up for one, the warranty will help cover the repair or replacement of major appliances, such as washing machines, refrigerators, and dishwashers. Depending on which option you choose, a home warranty can also cover systems like plumbing and HVAC systems. If you don’t have a home warranty, you’ll pay out of pocket for anything that goes wrong in your home, and that lack of coverage will cost you.
Is a home warranty on older homes worth it?
Simply put, yes. You can get home warranty on an older home and it may be something worth exploring. An older home may come with many appliances and systems that aren’t in tip-top shape. That’s why it may be wise to have home warranty protection for that added peace of mind. This may also be an excellent way to safeguard your budget and avoid unexpected expenses.
An older home usually means more wear and tear on appliances such as microwaves, refrigerators, dishwashers and washer and dryers. The same is usually true for HVAC systems that have been functioning for a long time. A home warranty plan makes it easier for you to get these items repaired or replaced by technicians you can trust.
Do home warranties cover things already broken?
Not all home warranty companies do, but Cinch covers unknown pre-existing conditions that you might find after moving in and offers helpful discounts on purchasing new appliances. Similar to homeowners insurance, home warranties typically require a monthly or annual payment along with a deductible at the time of service.
However, it’s important to note that home warranties are not the same as homeowners insurance. Mortgage lenders typically require homeowners insurance before they issue a mortgage policy, and it generally covers personal property, the interior and exterior of the real estate, and general liability insurance. Home warranty coverage is optional and generally applies to the systems and major appliances you rely on throughout your home to keep it running smoothly and comfortably.
What does a home warranty cover that homeowners insurance does not?
Unlike homeowners insurance, warranty coverage isn't required by your bank when you get a mortgage, so it might get skipped on the must-do list for first-time homebuyers or overlooked on the annual once-over you give your insurance coverage. Consequently, many homeowners don’t realize they have glaring gaps in their home’s coverage.
A homeowners insurance policy covers major damage, theft, loss, or liability associated with your home. But a home warranty covers situations your insurance doesn’t — the cost of repairing or replacing your major appliances and home systems when they break down unexpectedly. Home warranty coverage comes to the rescue if anything — from your built-in microwave to your plumbing — gives you problems due to everyday wear and tear or sudden malfunction. While an insurance policy has your back for major disasters, it won’t cover these day-to-day mishaps.
Why getting a home warranty is particularly worthwhile when buying a home
Appliance breakdowns are one of the hidden costs of owning a home. First-time buyers are often surprised by the extra expenses that sneak up after closing. Besides adding stress to your life, unexpected breakdowns can seriously gouge your pocketbook.
What are the cons of a home warranty?
The truth is that when it comes to deciding whether to purchase a home warranty or not, there are very few cons to consider. It’s possible that if you’re lucky enough to have filled your home with high-quality systems and appliances that are relatively new, still under manufacturer warranties, and built to last, you could manage to go months or even a few years without needing to service or replace something essential. In this case, you could avoid the monthly or annual cost of a home warranty. Then again, when you inevitably do need to service or replace a system or appliance, you will face the entire expense on your own.
Dangers of not getting a home warranty
Without warranty coverage, you might try to avoid repair costs when they pose a real challenge to your budget. But appliances like your fridge and home systems like your HVAC are the kinds of repairs that cannot wait. You need them up and running right away.
For example, if you live in a flood zone and your permanently installed sump pump goes down, you can’t leave it to chance that you’ll have extra money on hand to repair it. You may be unlikely to try to tackle repair needs yourself on complex systems, like your air conditioner or plumbing, or essential appliances, like washers and dryers. Without a warranty, you risk major upfront costs and the hassle of finding reputable and affordable service providers. Complimenting your standard insurance with a home warranty plan removes the guesswork and financial pressure from repairing your appliances and home systems.
So, is a home warranty really worth it?
For most people, a home warranty is worth it. Unless you’re a highly skilled repair technician, you’ll need to hire out for a repair or replacement at some point. Besides the cost-saving benefit, you also need to consider the peace of mind that comes with a home warranty and the time it will save you over the long run.
Benefits of having a home warranty
Peace of mind and serious savings
The last thing you want to do is come home to a broken water heater on a cold night or realize your dishwasher no longer functions during a holiday party. When this happens, a home warranty can provide peace of mind that someone is there to help — fast.
Instead of hunting down a repair service, a home warranty allows you to make a service request quickly and easily at any time of the day. A home warranty can save you money on large, unexpected repair bills. The right plan will include consistent monthly or annual payments. It will act as a buffer and help prevent you from taking money out of an emergency fund or pushing a credit card limit for covered items.
Know you’ll always have a trusted technician and consolidated repair history
When something breaks, having a home warranty can save you time vetting the right repair company or technician. A home warranty company does the work for you, so you don’t have to worry about who’s coming into your home.
With a Cinch home warranty, when you make a service request, we’ll match it with one of our thousands of network professionals. We’ll also provide you with the tools you need to keep your repair history in one place. With our platform, you can log into your account anytime to find all the information you need right at your fingertips.
Protect yourself with an affordable home warranty plan
Whether you’re purchasing a home or have been in your current home for a while, you should consider a Cinch home protection plan, which could limit your out-of-pocket expenses to as little as $100 per covered repair (subject to plan terms and conditions).
If we can't repair your appliance, we'll replace it, and we guarantee every covered repair for 180 days. You never know when something in your home will stop working. A warranty from Cinch can give you the peace of mind that comes from knowing that you'll be covered when you need a repair.
Discover your perfect home warranty with Cinch
Discover the Cinch difference and shop our protection plans today. Whether you’re purchasing your first home or are a longtime homeowner, it just makes good financial sense to consider a home warranty plan in addition to your insurance policy. Here are some key reasons why a home warranty plan is worth it for homeowners:
- Home warranty plans cover situations that insurance doesn’t.
- Investing a few hundred dollars in a warranty could save you hundreds to thousands in upfront repair costs for appliances.
- A warranty company sends a vetted, licensed service provider to your home after you file a claim, saving you the time and stress of arranging one yourself.
- A home warranty plan offers peace of mind that your home is covered no matter what unexpected repair issue crops up (subject to plan terms and conditions).
Millions of Americans have already saved money, time, and headaches by investing in a home warranty plan from a trusted name like Cinch.
Affordable home warranty coverage options
Companies often divide home warranties into different coverage options. The right option can make a warranty very affordable for your budget. Cinch Home Services has three different coverage levels for you to consider:
- Appliances: Our Appliances Plan ensures protection for everything from your microwave to your washer and dryer.
- Built-in Systems: With this plan, the warranty covers system components, like your heating and air-conditioning systems, plumbing, water heaters, and much more.
- Complete Home: You can have the best of both plans with our Complete Home Plan, which covers major appliances and in-home systems.
* Subject to plan terms and conditions.
*The information in this blog library is intended to provide general guidance on home warranties, and on the proper maintenance and care of systems and appliances in the home. Not all of the topics mentioned are covered by our home warranty or maintenance plans. Please review your home warranty contract carefully to understand your coverage.
*Our blog library may link to third-party sites that offer products, services, coaches, consultants, and/or experts. Any such link is provided for reference only and not intended as an endorsement or statement that the information provided by the other party is accurate. We are not compensated for any products or services purchased from these third-party links.