What Does a Home Warranty Actually Cover? (And What It Doesn't)

Quick answer: A home warranty is a paid service contract that repairs or replaces specific systems and appliances when they break down from normal wear. It is not homeowners insurance. Plans commonly cost about $564 to $984 a year plus a $75 to $125 fee per service call, and they come with exclusions and dollar caps that differ by company, contract and state, so read the contract before you buy.

Home warranty, insurance and manufacturer warranty compared

These three are often confused, and they pay for different things.

The National Association of Insurance Commissioners (NAIC) confirms that standard homeowners policies pay only for sudden, accidental damage from covered perils, not gradual deterioration. The Federal Trade Commission (FTC) notes that home warranties are service contracts that cover repairs and replacements for appliances and systems like air conditioning and that you pay for separately. For how insurance premiums work, see how to lower your homeowner's insurance premium.

What a home warranty typically covers

Plans fall into two broad groups: systems (heating and cooling, plumbing, electrical) and appliances (kitchen appliances and sometimes laundry). Many companies sell both together and offer add-ons such as pool or spa equipment, septic systems or roof leak repair. Which items are covered is listed in each contract, so the list is not the same from one company to the next.

Coverage is often partial. Consumer Reports gives the example of a policy that covers a refrigerator but not its ice maker, or a water heater but not the tank.

What it costs

This Old House's 2026 analysis, based on more than 4,000 quotes from 13 companies across all 50 states, found plans averaging $47 to $82 a month ($564 to $984 a year) and service fees of $75 to $125 per visit. Price depends on home size, location and coverage level.

Each claim triggers the service fee, so a plan with several repair visits in a year costs more than its sticker price. Ask about renewal pricing and cancellation terms as well.

Caps, limits and common exclusions

Home warranties limit what they pay, and the limits are where most surprises come from. One national provider's published 2026 plans, for example, list a $50,000 total limit per agreement term, up to $5,000 per heating and cooling system, $2,000 to $4,000 per appliance depending on the plan, and $1,000 for roof leak repair on its top plan. Limits differ by company, plan and state.

Typical exclusions and restrictions to look for:

• Pre-existing conditions. Many contracts exclude problems that existed before coverage began. Some providers advertise coverage of unknown pre-existing breakdowns, so compare the wording.
• Maintenance and installation. Consumer Reports says claims may be denied for poor maintenance or improper installation. Some providers say they do not require maintenance records, but keep your service records anyway.
• Depreciated replacement. Replacements may be paid at depreciated value, leaving you to cover the difference.
• Code and permit upgrades. One provider's sample California contract excludes repairs that would violate current laws, with a limited allowance on its top plan.
• Secondary damage. The same sample contract says the company is not liable for secondary or consequential damage, such as to floors or stored food.
• Choice of contractor and waiting periods. The company usually picks the technician, and some plans have a waiting period before coverage starts.

The California Department of Insurance warns that all home warranties contain dozens of exclusions and advises reading the dollar limits before buying.

How this varies by state

Home warranty rules are set mostly at the state level, and they are not uniform. Here are a few examples:

• California. The Department of Insurance licenses and regulates home warranty companies, requires contracts to list covered items, exclusions and service fees, and lets you check a company's license status.
• Texas. The Texas Department of Licensing and Regulation (TDLR) has overseen residential service companies since September 1, 2021, when the program moved from the Texas Real Estate Commission.
• New York. The Department of Financial Services treats home warranties as service contracts under Article 79 of the Insurance Law, not as insurance.
• Florida. Home warranty providers must be licensed by the Office of Insurance Regulation under Chapter 634, Part II of the state statutes.

Other states may regulate lightly or through different agencies. Check with your state insurance department or attorney general's office, confirm the company is licensed where required, and look up complaints. At the federal level, the Magnuson-Moss Warranty Act covers service contracts and requires clear, plain-language terms. You can report a bad experience to the FTC at ReportFraud.ftc.gov.

Is a home warranty worth it?

It depends on your home, your savings and your tolerance for repair surprises. Questions that help:

1. What is already covered? New appliances and new construction often have manufacturer or builder warranties, and some credit cards extend warranties. Consumer Reports suggests checking these first.
2. How old are your systems? Use the appliance lifespan guide to see what is nearing the end of its life, and whether those items are actually covered.
3. Does the math work? Compare a year of plan cost plus expected service fees against what you would likely pay for repairs, and against a repair fund of your own.
4. How good is the company? Check state regulator complaint records and reviews, and read how claims, repair versus replacement and cash-outs are handled.
5. Can you cancel? Look at refund terms and fees.

Watch for scam mailings and calls. Consumer Reports warns that con artists send official-looking letters claiming your warranty is expiring, even to people without one. Verify through a phone number you look up yourself.

Keep records that support a claim

A home warranty claim goes more smoothly when you can show what you have, when it was installed and how it was cared for. In Steadwell you can save the contract and receipts in the home document vault, log service visits, and add a task so the renewal or cancellation date does not slip by. The warranty tracker sends expiry alerts for manufacturer and retailer warranties, and the home insurance tracker holds your homeowners policy and claims. Steadwell is not a home warranty or insurance company.

Frequently asked questions