How Much Does A Home Warranty Cost For Buyers?

Buying a home is a significant investment, and like any major purchase, it often comes with unforeseen expenses. One way to alleviate some of this financial strain is by purchasing a home warranty. A home warranty can help protect you from the unexpected costs of home system and appliance breakdowns, which can quickly add up. But how much does a home warranty cost for buyers, and what factors influence this price?

A home warranty is a service contract that covers the repair or replacement of major household systems and appliances that break down due to normal wear and tear. For homebuyers, it offers peace of mind, knowing that if an appliance or system fails shortly after moving in, the repair or replacement costs are covered. The cost of a home warranty can vary widely depending on several factors, including the coverage level, the home’s location, and the specific warranty provider.

What is Included in a Home Warranty for Buyers?

Before diving into the costs, it’s important to understand what a typical home warranty for buyers covers. Generally, a home warranty includes major systems such as HVAC, plumbing, and electrical systems, as well as common household appliances like refrigerators, dishwashers, and washers and dryers. However, the exact coverage will depend on the plan you choose. Some plans focus on home systems, while others may cover appliances and other household items. There are also combination plans that cover both.

Not every item in your home will be covered by a home warranty, and coverage can vary from one provider to another. It is essential to carefully review the warranty terms to ensure that the appliances and systems you wish to be covered are included. Some warranties also offer additional options or add-ons for items such as pools, spas, and septic systems, although these typically come at an extra cost.

Factors That Influence Home Warranty Cost

The cost of a home warranty is influenced by several factors. These can include the level of coverage, the size and age of the home, the location, and the provider. Here is a closer look at how each of these factors can affect the price:

Coverage Level: One of the most significant factors affecting the cost of a home warranty is the level of coverage you choose. Basic plans tend to cover the most systems and appliances, while more comprehensive plans may include additional appliances or home systems. The more extensive the coverage, the higher the plan's cost.
Size and Age of the Home: Larger homes generally cost more to insure, and a home warranty plan for a larger home will reflect that. Similarly, older homes may carry higher warranty costs due to the increased likelihood of system breakdowns. If your home is older or has appliances nearing the end of their useful life, you may find that your warranty costs are higher.
Location: The location of your home can also impact the price of a warranty. Homes in areas with higher living costs or where repair and replacement services are more expensive may face higher warranty premiums. Additionally, certain regions may have specific plans or providers that are more popular or available, which can also affect pricing.
Service Call Fees: Many home warranties have a service call fee, which is a cost you pay each time you request service. These fees can range from $50 to $150, depending on the plan and provider. Some providers allow you to choose your service call fee based on the level of coverage you want, which can affect your overall costs.
Add-ons and Upgrades: If you require extra coverage for items such as pools, spas, or additional appliances, you may need to pay for add-ons. These additional coverages are usually optional, but they can significantly increase the cost of your warranty.

What Does a Home Warranty Cost for Buyers?

On average, home warranty plans for buyers typically cost between $350 and $700 annually, or $ 29 to $ 58 per month. However, the total price you pay will depend on the factors mentioned earlier, including the level of coverage and any additional services or upgrades. Service call fees typically add an extra $75 to $125 per claim, and this amount must be paid each time you request a repair or replacement under the warranty.

Most providers offer three main types of plans:

Basic Plans: These typically cost between $350 and $500 annually and cover basic home systems like HVAC, plumbing, and electrical. Appliances such as refrigerators and dishwashers may be included in these plans, but coverage is typically limited.
Comprehensive Plans: These plans, which cover both home systems and appliances, generally cost between $500 and $700 annually. They offer more extensive coverage and are a good option for buyers who want a more inclusive warranty.
Combination Plans: A combination plan is a more customized option, allowing you to select specific systems or appliances for coverage. The cost will depend on the items you choose to include and the overall coverage level.

While a home warranty may seem like an added expense, it can save homeowners significant money in the long run by covering unexpected repairs. For example, the average cost to repair or replace a water heater can exceed $1,000, whereas the cost of a home warranty service call may range from $75 to $150, depending on the provider.

Do Home Warranties Really Save Money?

Home warranties can save buyers money, particularly for those new to homeownership or those who are not skilled in repairs. The upfront cost of the warranty may seem high, but it can help avoid large, unexpected repair bills. For example, replacing an HVAC system or repairing a plumbing issue can cost thousands of dollars, while the home warranty might only require a small service fee.

Additionally, for first-time homebuyers, a warranty can offer peace of mind. It is especially helpful if you are purchasing an older home, where the appliances and systems may be near the end of their useful life. A warranty helps mitigate the financial risk of purchasing an older property and makes sure that you do not face a financial burden when something breaks down.

What Are the Benefits of a Home Warranty for Buyers?

Predictable Costs: One of the primary benefits of a home warranty is that it helps homeowners budget for unexpected repairs. With a home warranty, you know exactly what your service call fee will be, and the cost of major repairs is covered by the warranty provider. This predictability makes it easier to plan your monthly budget without worrying about sudden, expensive repairs.
Peace of Mind: Buying a home can be a stressful process, and the last thing you want to worry about after moving in is a broken appliance or a malfunctioning system. A home warranty provides peace of mind, knowing that if something goes wrong, you won't be left with a large repair bill. It also helps reduce the stress of dealing with contractors and repair services, as the warranty provider will handle the logistics.
Increased Home Value: In a competitive housing market, offering a home warranty can make your property more appealing to potential buyers. If you are a seller considering offering a warranty, it can act as a selling point, giving your home a competitive edge. Buyers often appreciate knowing that they will not have to deal with costly repairs shortly after moving in.

What Factors Should You Consider Before Purchasing a Home Warranty?

While the cost of a home warranty can be a significant benefit to new homeowners, it is essential to carefully consider several factors before purchasing a plan. Not all warranties are the same, and not every home requires the same level of coverage. Below, we’ll explore the key considerations that can affect your decision and make sure that the warranty you choose is the best option for your needs.

Understanding Coverage Limits and Exclusions

A home warranty can cover a wide range of systems and appliances; however, it is essential to understand that not everything will be covered under the plan. For example, many plans exclude coverage for damages caused by neglect, misuse, or certain types of environmental factors like flooding or earthquakes. Be sure to read the fine print to understand exactly what is and isn’t covered under your warranty.

Home warranty providers may also set coverage limits for certain items. These are the maximum amounts the warranty provider will pay toward repairs or replacements. For instance, if a major appliance breaks down and the cost of replacing it exceeds the coverage limit, you will be responsible for covering the difference. Some appliances, such as refrigerators or ovens, may have a specific dollar limit on replacement costs, so it's essential to be aware of these limits when selecting a warranty plan.

The Fine Print of Service Call Fees

When considering a home warranty, be aware that many plans charge a service call fee each time you request a repair or replacement. The fee varies depending on the warranty provider and the plan you select, typically ranging from $50 to $150. This is a fee that must be paid in addition to the cost of any repairs made.

You may have the option to select your service call fee when purchasing your warranty; lower service fees often result in higher annual premiums. It’s a good idea to consider how often you expect to need repairs and whether paying a higher service fee upfront is worth the potential savings down the line.

Customizing Your Plan with Add-ons

Most home warranty providers offer a range of customization options, allowing you to add coverage for specific appliances or systems that might not be included in the basic plan. Common add-ons include coverage for pools, spas, septic systems, and wells. If your home has these systems, adding them to your plan could be a smart choice. However, be mindful that add-ons come at an additional cost.

When selecting a home warranty plan, consider whether the add-ons are worth the additional investment. For example, if your pool is older and prone to breakdowns, it might make sense to add pool coverage. On the other hand, if your home does not have a pool or spa, you may not need to pay extra for these options.

Comparing Home Warranty Providers

Not all home warranty companies offer the same coverage or pricing, and choosing the right provider is key to ensuring you get the best deal. When comparing providers, consider the following factors:

Reputation: Look for providers with positive customer reviews and ratings. You can check the Better Business Bureau (BBB) for reviews and ratings of home warranty companies. High-quality providers will have a good track record of providing prompt and reliable service.
Customer Service: One of the most important aspects of a home warranty is the customer service provided by the company. If an appliance or system breaks down, you want a warranty company that offers responsive and helpful customer support. Providers that offer 24/7 service and easy-to-use online portals or apps tend to offer a better experience for homeowners.
Claims Process: Make sure to understand the process for submitting claims. Some companies make it easy to file a claim online or via a mobile app, while others may require a lengthy phone call. A streamlined claims process can save time and reduce stress when dealing with repairs or replacements.
Exclusions and Terms: Not all home warranties are created equal, and some may have exclusions or terms that make them less favorable. Be sure to read through the contract carefully to check for any exclusions or restrictions that may affect your coverage.

Choosing Between Monthly and Annual Payments

When purchasing a home warranty, you typically have the option to pay either monthly or annually. Some homeowners prefer monthly payments as they can spread out the cost over time, while others prefer to pay annually in order to save on administrative fees and make sure they are covered for the full year.

Monthly payments can be easier to budget for, as they break down the overall cost into smaller, more manageable amounts. However, annual payments may offer a slight discount, so if you are able to pay upfront, it can be a cost-effective option.

The Age of Your Home and Its Appliances

The age of your home and its appliances should also play a role in deciding if a home warranty is a good investment. Older homes tend to have appliances and systems that are more prone to breakdowns, which can increase the likelihood of needing to use your home warranty. In these cases, a warranty can offer peace of mind and save you from expensive repairs.

However, if you are purchasing a new home with relatively new appliances and systems, you may not need a home warranty right away. Newer appliances are less likely to experience major issues during the first few years, and many manufacturers offer warranties for their appliances during this period. In these cases, a home warranty may be a more unnecessary expense.

Home Warranty vs. Home Insurance

It’s essential to note that a home warranty differs from home insurance. Home insurance protects against damage to the structure of the home, like fire or storm damage, as well as damage to personal belongings. Home warranties, on the other hand, cover the cost of repairs and replacements for home systems and appliances that break down due to normal wear and tear.

While both types of coverage are important for protecting your home, they serve different purposes. Home insurance is generally required by lenders when purchasing a home, while home warranties are optional. If you are considering a home warranty, review your home insurance policy to ensure you have the right combination of coverage for your needs.

How Complete Protection™ Will Help

At Complete Protection™, we understand how important it is to protect your home and your budget. That is why our home warranty plans are designed to give you the peace of mind you need while saving you from unexpected repair costs. With no deductible, customizable coverage options, and no hidden fees, Complete Protection™ offers simple and straightforward plans to meet your needs. If you are a home inspector, we also offer specialized options tailored for you.

If you have any questions about our home warranty services, please don't hesitate to contact us today.