Home Warranty · FAQ

Home warranty FAQ

The short version: a home warranty costs around $600 a year plus $75 to $125 per service call, it's a service contract rather than insurance, it covers failure from wear and tear subject to caps and exclusions, it usually assigns your contractor, and it usually contains an enforceable arbitration clause. Whether it's worth it depends mostly on whether you could otherwise absorb a surprise repair bill.

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Most questions about this product have the same answer: read your contract. That sounds evasive and it isn't. Unlike a roof or a furnace, where physical reality sets the answer, a home warranty is its document. The exclusions, caps, and definitions are the product.

The second recurring answer is: check your state. These contracts are regulated at state level and the agency differs — insurance departments, real estate commissions, consumer protection bodies. That determines your rights and where you complain.

The third is: do the arithmetic. Premium of $300 to $1,000 a year plus $75 to $125 per dispatch is a known cost. What you get back is capped and conditional. For many homeowners with reserves, the honest recommendation is to skip the product and fund the repairs directly.

None of this makes home warranties a scam. It makes them a financial product with a specific, narrow use case: converting unpredictable bills into a predictable subscription for someone who genuinely can't handle the unpredictable version.

How to choose

The contract is the product: Exclusions, caps, and definitions. Everything else is packaging.
Check your state's regulator early: It's not always the insurance department, and knowing matters only when something goes wrong.
Do the total-cost math yourself: $300 to $1,000 plus $75 to $125 per call. Compare to savings.
Assume you can't pick the contractor: If that's a dealbreaker, this product isn't for you and no amount of shopping will change it.
Keep maintenance records regardless: They're the difference between an approved and a denied claim more often than anything else you control.

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FAQ

Home Warranty faq — common questions

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How much does a home warranty cost?

About $600 a year on average, typically $400 to $700, ranging $300 to $1,000 by plan. Plus $75 to $125 per service call.

Is a home warranty worth it?

It's worth it if you can't absorb a surprise repair bill and you accept caps, exclusions and an assigned contractor. If you have savings and trades you trust, self-insuring is usually the better deal.

What is not covered by a home warranty?

Typically pre-existing conditions, failures attributed to improper maintenance, named exclusions, amounts above the coverage cap, and work requiring code upgrades. Your contract's exclusions section is the authority.

Can I take a home warranty company to court?

Often not — binding arbitration clauses are common and enforceable under the Federal Arbitration Act. Read the dispute resolution section before you sign.

Do home warranties cover pre-existing problems?

Generally no. These contracts are written around failure from wear and tear, deterioration or inherent defect occurring during the term, and companies may but need not inspect before issuing.

Sources

Where these figures come from

Fixr — Home Warranty Cost · retrieved 2026-07-26
California Insurance Code § 12740 · retrieved 2026-07-26
California Insurance Code § 12761 · retrieved 2026-07-26
9 U.S.C. § 2 — Federal Arbitration Act · retrieved 2026-07-26
15 U.S.C. § 2301 — service contract definition · retrieved 2026-07-26