What Is The Cost Of A Home Warranty?

A home warranty covers most parts and labor costs for repairs or replacements of appliances that are protected under a contract. Homeowners can purchase this additional coverage to protect their budgets from unexpected and often expensive repairs. It’s different and usually more affordable than home owners insurance.

The cost of a home warranty plan is typically between $25–$50 per month, plus service fees of $75–$125 but there’s a catch. Typically, policyholders pay a monthly or annual premium, a service fee for repair technicians, and some companies also require a one-time enrollment fee. 

When developing a financial plan, it’s essential to factor in each cost required by the home warranty company of your choice. Here is more information on what you should expect. 

Contract Premiums

While each home warranty cost can vary dramatically based on the extent of coverage, and the company which offers protection, you should expect an average premium anywhere between $300-$804. You may not be required to cover the entire yearly premium upfront as some providers offer a monthly payment plan, resulting in an average of $25–$50 per month. 

Home Warranty Cost vs. Home Repair Expenses

After purchasing a home warranty, HVAC systems and other appliances are financially secure from unexpected breakdowns, giving policyholders peace of mind. To understand the significant savings this insurance provides, let’s look at the average expense of a contract from the group American Home Shield to the cost for repairs for equipment in the home. 

Protection Direct offers four plans, which average between $600–$720, annually. Of course, average prices do fluctuate, due to the size of your home and location. To get an accurate quote for your property, fill out this online form. 

Keep in mind, these average costs for repairs are per incident. You can buy a home warranty and pay a deductible and service fee, or expect to pay these prices by deciding to go without optional insurance.

Average Cost to Repair Common Systems and Appliances

The cost to repair or replace an appliance or home system varies widely, depending on your location, the make and model of the appliance, and other factors.

Here are some average costs for repair and replacement:

• Heating system: $285 to repair vs. $4,249 to replace 
• Air conditioner: $347 to repair vs. $5,413 to replace 
• Plumbing system & stoppage: $305 to repair vs. $1,038 to replace
• Sewer line: $2,560 to repair vs. $2,892 to replace
• Electrical system: $317 to repair vs. $1,287 to replace
• Water heater: $546 to repair vs. $1,065 to replace
• Refrigerator: $310 to repair vs. $1,925 to replace
• Oven/range/stove/cooktop: $150 to repair vs. $1,675 to replace
• Clothes washer: $310 to repair vs. $1,250 to replace 
• Clothes dryer: $250 to repair vs. $1,075 to replace

 It’s important to remember that most home warranty companies do enforce cost limitations when repairing or replacing systems or appliances. For instance, if the maximum payout per contract term for refrigerator protection is $1500, and a replacement costs $2,000, the policyholder must make up the difference. Still, an adequate emergency fund is easier to manage with a home warranty company supplying the bulk of financial support.