A home warranty is a service contract that offers financial protection against repairs and replacements to your home’s systems and appliances. But what does a home warranty cover? Depending on the plan you choose, this could include electrical, plumbing, heating and air conditioning systems as well as common appliances like refrigerators or washers.

Let’s walk through how home warranties work, your coverage options, who pays for them, and how you can purchase one.

How Do Home Warranties Work?

It’s important to clarify that home warranties aren’t the same as homeowner’s insurance.

Homeowner’s insurance will pay for accidental damage to your home and belongings due to theft or natural disasters. Home warranties, on the other hand, cover the repair or replacement of your home’s systems and appliances due to age or typical wear and tear.

So, how do home warranties work when something breaks down?

For example, let’s say the dryer is broken. The homeowner calls the home warranty company. They send one of their approved service providers to examine the problem. If it’s covered under the plan, they make the repairs. The homeowner pays a small service fee. This is in addition to the upfront cost to purchase the warranty.

If the homeowner did not have a home warranty plan, they would have to repair the appliance themselves or find a service provider – and pay the full cost of any materials and labor.

Home Warranty Coverage

Since every home warranty plan is different, it’s important to look closely at home warranty coverage before you sign the contract. The average cost of a basic coverage plan ranges from $350 to $600 a year. Most plans are for one year.

What does a standard home warranty cover? Here’s a list to give you an idea, but you should also confirm with your chosen provider.

Home systems

  • Heating and air conditioning
  • Electrical
  • Smoke detectors
  • Plumbing
  • Water heaters
  • Ceiling fans
  • Garbage disposals
  • Central vacuums


  • Refrigerator
  • Stove/Oven
  • Washer
  • Dryer
  • Dishwasher
  • Microwave
  • Garage door openers

You can also add items like pools, spas, septic units, well pumps, or guest houses for an additional cost.

Who Pays For A Home Warranty?

You may be interested in getting a home warranty with your new home, but also be wondering who pays for a home warranty, buyer or seller? It could be either party.

The seller might purchase the home warranty as a marketing tool, to give buyers peace of mind. This is especially common if the house is older.

The buyer might purchase the home warranty if they don’t have an emergency fund and want to be prepared for any unexpected repairs.

Buying a Home Warranty

In most cases, people buy a one-year home warranty plan during the closing process, so they’re prepared for any repair issues as soon as they have the keys to their new home. Certain providers will offer a discount if you purchase a plan within 30 days of closing.

While your real estate agent can provide recommendations, some of the largest and highest-rated companies include American Home Shield, Liberty Home Guard, and Select Home Warranty.

Home warranty coverage can protect against expensive, unexpected repair bills and provide peace of mind. Just remember, a home warranty doesn’t mean you’re off the hook for everything. Read your contract to understand what’s covered and any service fees you’ll pay for each service visit.