Is a Home Warranty Worth It? Costs, Coverage and Common Myths

Home warranties come up in almost every transaction I work on. Sellers ask whether offering one will help their listing. Buyers ask whether they should buy one, or ask for one in their offer. And homeowners who already have one often learn what it really covers only when the furnace stops working in January.

The honest answer is that a home warranty can be a smart, low-cost safety net or a frustrating expense, depending on the home, the plan and your expectations. Here is what you need to know to decide.

What a home warranty is, and what it isn’t

A home warranty is a one-year service contract, usually renewable. When a covered system or appliance breaks down from normal wear and tear, you call the warranty company, it sends a contractor from its network, and you pay a set service fee. The company pays for the covered repair, or a replacement if the item can’t be repaired, up to the plan’s limits.

It is easy to confuse with other kinds of protection, so here is how they compare.

Type of protection	What it covers	Who usually pays
Home warranty	Repair or replacement of covered systems and appliances that fail from normal wear	Buyer or seller, often paid at closing
Homeowners insurance	Sudden, accidental damage like fire, storms, theft and water damage from a burst pipe	Homeowner; required by most lenders
Manufacturer warranty	Defects in a specific appliance or system, usually parts and sometimes labor	Included with the product
Builder warranty	Workmanship and major structural defects in new construction	Included with a new home

Here is a simple way to remember it: if a 15-year-old water heater wears out, that is a warranty question. If it bursts and floods the basement, the cleanup and damage are an insurance question. My guide to homeowners insurance in Virginia explains that side.

What a home warranty typically costs

Prices depend on the company, the plan level, your home’s size and where you live. Two recent national surveys give a good sense of the range. This Old House analyzed more than 4,000 quotes from 13 companies and found an average of about $56 a month, or $672 a year, with most plans between $564 and $984 a year. NerdWallet’s 2026 research put the average at about $73 a month, with plans ranging from $28 to $191 a month depending on coverage.

Cost	Typical range	What to know
Annual plan price	$564 to $984 a year (about $47 to $82 a month)	Combo plans covering systems and appliances cost more than either alone
Service call fee	About $65 to $125 per visit	Paid each time a technician comes out; some plans charge more or less in exchange for a different premium
Optional add-ons	About $3 to $30 a month each	Pools, septic systems, well pumps, a second refrigerator or limited roof leak coverage
Coverage caps	Set per item, per claim or per year in each contract	You pay anything above the limit

One more cost to factor in: the items a plan won’t pay for during a covered repair. Permits, code upgrades, removing the old unit and the work needed to reach a part, like opening a wall, are common exclusions. Those charges can add up on a big repair.

Worked example: does it pay off?

Say you buy a plan for $672 a year with a $100 service fee. Here is how three different years might look. The repair costs are illustrative; actual prices vary by home and contractor.

Your year	Without a warranty	With a warranty	Result
Nothing breaks	$0	$672	The plan costs you $672
A dishwasher repair ($450) and a garbage disposal replacement ($350)	$800	$672 plus $200 in fees = $872	About break-even
The water heater fails and is replaced ($1,800)	$1,800	$672 plus $100 = $772	The plan saves about $1,000

The math shows the real value of a warranty: it turns a large, unpredictable bill into a smaller, predictable one. Over many years, though, many homeowners pay more in premiums than they get back. If you have a healthy repair fund, you may come out ahead by setting aside the same $56 a month yourself.

Common misconceptions about home warranties

Most frustration with home warranties comes from expecting something the contract never promised. These are the myths I hear most often.

Myth	Reality
“It works like homeowners insurance.”	Insurance covers sudden damage. A warranty covers parts that wear out. You likely need insurance either way; your lender requires it.
“Everything in the house is covered.”	Only the items listed in your plan are covered. Roofs, pools, septic systems and second refrigerators are often excluded or sold as add-ons.
“If something breaks, I get a brand new one.”	Companies usually repair first and replace only if a repair isn’t possible. Replacements are typically similar in features, not an upgrade, and some plans offer a cash payment instead that may be less than retail.
“I can call my favorite plumber.”	Most plans send a contractor from their own network. Using your own may not be reimbursed unless the company approves it first.
“The home passed inspection, so any problem is covered.”	Many plans exclude problems that existed before coverage began. Some cover issues that couldn’t be detected, but the terms vary a lot.
“Coverage starts the day I buy it.”	Plans bought at closing usually start at closing. Plans bought later often have a waiting period, commonly about 30 days.
“Once I have a plan, repairs are free.”	You still pay a service fee per visit, plus any costs above the coverage cap and excluded items like permits or code upgrades.
“Maintenance doesn’t matter if I’m covered.”	Lack of maintenance is one of the most common reasons claims are denied. Keep receipts for HVAC service, filter changes and other upkeep.
“A seller-paid warranty means I can skip the inspection.”	Never. A warranty doesn’t cover pre-existing problems or the house’s structure, roof or foundation. Always get a home inspection.

What’s usually covered, and what isn’t

Usually covered	Often an add-on	Often excluded or limited
Heating and air conditioning	Pool and spa equipment	Problems that existed before coverage
Water heater	Septic system and well pump	Damage from lack of maintenance
Plumbing and electrical systems	Second refrigerator or freezer	Permits, code upgrades and haul-away
Kitchen appliances and laundry machines (in combo plans)	Limited roof leak repair	Roof replacement, structure and foundation
Garbage disposal and ceiling fans	Water softener	Cosmetic issues and upgrades

Every company and plan is different, so treat this as a starting point and read the actual contract, especially the limitations section.

Home warranties in a home sale

For buyers

If your budget will be tight after the down payment and closing costs, a warranty can protect you from a surprise repair in your first year. You can ask the seller to pay for one in your offer. It is a modest request that many sellers accept, especially in today’s slower market. If your inspection turns up aging systems, a seller-paid warranty can be one tool in negotiating repairs after inspection, though it shouldn’t replace a credit for known problems.

For sellers

Offering a warranty can make your listing more appealing and can head off a renegotiation if an older system becomes a worry for buyers. Many companies also offer seller coverage while your home is listed, then transfer the plan to the buyer at closing. With more homes for sale in Northern Virginia this fall, it is one of the lower-cost concessions you can offer. See my article on strategies when your home isn’t selling for other options.

Virginia rules worth knowing

Virginia regulates home warranties as home protection contracts under Chapter 26 of Title 38.2 of the Virginia Code. A few points matter for consumers:

• Licensing. A company must be licensed by the State Corporation Commission before it can sell home protection contracts in Virginia. You can check with the SCC’s Bureau of Insurance before you buy.
• Clear terms. Contracts must be written in simple, readable language and must spell out the service fee, the covered items, all exclusions and limitations, and how cancellation works.
• It’s optional. The application or contract must state that buying a home warranty is not mandatory. No one can require you to buy one to close.
• Response times. State law sets deadlines for starting service after you file a request, with faster response required for heating failures in winter.

If you have a dispute with a licensed company, the Bureau of Insurance handles consumer complaints.

How to choose a home warranty: 9 questions to ask

1. Is the company licensed in Virginia?
2. What is the service fee, and do I still pay it if the claim is denied?
3. What are the coverage caps per item, per claim and per year?
4. Do you repair first, and how do you decide when to replace? Do you offer cash instead?
5. Can I use my own contractor, and will you reimburse me if I do?
6. How do you handle pre-existing conditions and problems that couldn’t be seen?
7. What maintenance records do you expect when I file a claim?
8. Are permits, code upgrades, haul-away and access costs covered?
9. What are the cancellation and refund terms, and how much does the plan go up at renewal?

Then check reviews, complaint history and how quickly the company sends a contractor in your area. A great price means little if it takes a week to fix your air conditioning in July.

Is a home warranty worth it for you?

Your situation	My take
Older home, with HVAC or water heater more than 10 years old	Often worth it, especially in year one
Seller is offering to pay for it	Accept it
Little cash left after closing	Often worth it for peace of mind
New construction with a builder warranty	Usually not needed in the first year or two. See my new construction tips.
Systems recently replaced and still under manufacturer warranty	Probably not needed
Strong emergency fund and comfortable handling repairs	You may do better saving the premium yourself

Whatever you decide, maintenance matters more than any plan. My home maintenance checklist shows what to do daily through every 20 years, and keeping those records also protects your claims.

Frequently asked questions

How much does a home warranty cost?

Most plans cost about $564 to $984 a year, or roughly $47 to $82 a month, according to a 2026 This Old House analysis. You will also pay a service fee, often $65 to $125, each time a technician visits. Add-ons like pool or septic coverage cost extra.

Can I buy a home warranty after closing?

Yes. You can buy one at any time, but plans bought after closing usually have a waiting period, often about 30 days, before you can file a claim. Buying at closing typically avoids that wait.

Who pays for the home warranty in a home sale?

It is negotiable. Sellers often pay as a concession, and buyers can request it in their offer. Buyers can also purchase a plan on their own at closing.

Can I cancel a home warranty?

Most contracts allow cancellation, often with a prorated refund minus fees or the cost of claims already paid. Virginia requires the cancellation terms to be stated in the contract, so read that section before you buy.

Does a home warranty cover the roof?

Usually not in a basic plan. Some companies sell limited roof leak repair as an add-on, but roof replacement and storm damage are generally excluded. Storm damage is typically a homeowners insurance claim.