Home warranty decision guides

The math, written out. Column A: annual premium ($400 to $900 for most plans), plus add-ons, plus two or three service fees at $75 to $125. Column B: the same total, deposited into a savings account you own, every year. Column A caps what you can receive and excludes a list of things; Column B does neither. Over a decade, Column B is a meaningful sum with no exclusions attached.

When Column A wins. When you genuinely cannot write a $2,000 check, a subscription that spreads the cost has real value even at unfavorable expected value. That's a legitimate reason to buy insurance-like products, and it applies here.

When Column A loses badly. When your equipment is new and still under manufacturer warranty — the FTC's rule distinguishes a manufacturer's no-extra-charge written warranty from a separately purchased service contract, and paying twice for the same coverage is simply waste. Also when you already have a plumber, an HVAC tech and an electrician you trust, because these contracts assign the contractor.

Repair vs replace under a cap. If the company's cap on an item is well below replacement cost, you should treat that item as partly self-insured no matter what you buy. Find the cap, subtract it from realistic replacement cost, and that difference is yours.

How to choose

Write both columns down

$400 to $900 premium plus $75 to $125 per call, versus the same money in your own account. Seeing it written settles most decisions.

Check manufacturer coverage before buying

New equipment under warranty makes a home warranty on that equipment redundant.

Value your existing trades

If you have contractors you trust, being assigned someone else is a genuine downgrade in service.

Find the cap on your most expensive system

If the cap is far below replacement cost, that system is only partly covered whatever the brochure says.

Buy for cash-flow, not for expected value

This product smooths bills. It is not, on average, a way to spend less money.