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Home /  Home Warranty Guides / How Does A Home Warranty Work? A Comprehensive Guide To Protecting Your Home
last_updated_date Last updated: December 14th, 2023

How Does A Home Warranty Work? A Comprehensive Guide To Protecting Your Home

Image Displaying How Home Warranty Protects Home Appliances & Systems

A home warranty is a contract that covers major home systems and appliances from regular wear and tear by offering timely repairs and replacements. These home warranty contracts are an affordable alternative to otherwise costly repairs, maintenance, and the additional headache of finding the right contractors.

The basics of what home warranty covers and how it works are covered in the points below. 

Home warranties typically work as follows:

  • Purchase A Home Warranty Plan
    Homeowners can purchase a home warranty plan from various companies. Each company offers a variety of plans with different coverage levels and pricing.
  • File A Claim
    When a covered item breaks down, the homeowner files a claim with the warranty company.
  • The Warranty Company Sends A Technician
    The warranty company sends a qualified technician to the homeowner’s home to diagnose the problem.
  • The Technician Repairs Or Replaces The Item
    If the warranty covers the problem, the technician will repair or replace the item at no additional cost to the homeowner.
  • Homeowner Pays A Service Fee
    The homeowner may be required to pay a service fee, typically around $75-$100.

This article discusses each of these points in detail to better understand how a home warranty works.

What is Covered by A Home Warranty?

New: Home warranty covers major home appliances and systems that can fail because of day-to-day usage. Each plan has different coverages, but here are some commonly covered systems and appliances:


  • Refrigerator
  • Washing Machine 
  • Air conditioning 
  • Dishwasher 
  • Garage door opener 
  • Garbage disposal 
  • Oven, range, or cooktop 


  • Electrical
  • Ductwork
  • Interior Plumbing
  • Heating
  • Water heater

While many home warranty plan includes the essential household items, here are some of the optional add-ons offered by the company at an extra price:

  1. Pest control 
  2. Pool and spa
  3. Sump pump 
  4. Roof leak coverage
  5. Well pumps
  6. HVAC maintenance (pre-season)
  7. Air conditioning
  8. Septic tank and pumping 
  9. Water softeners
  10. Central vacuum systems
  11. Sprinkler systems
  12. Jetted bathtubs

What is not covered by a home warranty?

It is essential to know that home warranties don’t cover all types of repair/replacement. Every plan has certain limitations and exclusions. 

Some of the most common exclusions are:

  • Pre-existing conditions, such as problems that were already there before purchasing the home warranty
  • Cosmetic issues such as dents, scratches, and more
  • Appliance or systems misuse for non-residential use 
  • Damage due to improper installation/ maintenance issues
  • Negligence due to improper maintenance of a system or appliance 

We recommend reading the sample contract and reviewing the coverage limitations to determine the specific exclusion list of the company of your choice. Also, there are coverage caps (amount payable by the company for repairs/replacements) on specific household items.

How to Obtain A Home Warranty?

Once you have decided to buy a home warranty, the tips below on how to obtain a home warranty will help you in obtaining a plan seamlessly:

How To Obtain A Home Warranty?

  1. Identify The Plan That Suits Your Needs:
    The offered plan has specific inclusions and exclusions, including different household items. Note down the items you want coverage for, and find the options that include your options. Various plans in the market offer different coverage plans at differing price points. Your main priority must be to find a plan that suits your needs.
  2. Coverage Limits:
    Coverage limits refer to the maximum amount the company will pay to repair or replace the items. Evaluate your value’s asset and see if the offered limitations are sufficient to cover the repair/replacement of the item. Also, a home warranty company has specific appliance and systems coverage limits, so pay close attention to the company’s guidelines.
  3. Pricing:
    Pricing is a crucial element that homeowners shouldn’t overlook. As the price can vary greatly from home warranty to another, compare the prices and check the company’s reviews before finalizing a home warranty. Home warranties with basic coverage start from as low as $40.
  4. Customer Service:
    Another essential aspect to consider while settling down for a home warranty is customer service. Get a home warranty company that is available 24/7 and has a good reputation on online platforms. Moreover, to understand the company’s services, you can also read customer reviews on our platform.
  5. Check with the NSCHA:
    The home warranty company is registered as per the state guidelines. You should also check with the National Home Service Contract Association to ensure you are not being scammed. The NHSCA is a non-profit trade organization that ensures home warranty regulations are efficiently followed and offers support.

Costs & Payment Structure 

As per a study, a home warranty can range anywhere from $35-$90 monthly, depending on the company and coverage. Service fees can typically range from $75-$125. Here is an in-depth discussion of the costs associated with the home warranty:

Monthly premium: Many companies provide homeowners the freedom to pay monthly. A combination plan of systems and appliances can range from $75 to $125. 

Service call fee: In addition to the premium, homeowners must pay service call fees for each technician’s visit. Usually, the industry average is usually $75-$100, depending on the chosen plan. 

How To File A Claim For A Home Warranty?

How To File A Claim For A Home Warranty?

  1. Read The Contract:
    Before filing a claim, you should read the home warranty contract. Check whether the plan covers the issue or not.
  2. Gather All The Information:
    Collect all the claim-related information before contacting the home warranty company, including the household items’ age, make, and model.
  3. Connect With The Home Warranty Company: 
    After gathering the information, you will need to connect with the home warranty company to start the process. Give the company the details to assess whether the household item is covered under the plan.
  4. Service Appointment: 
    After assessing the claim, the company will send a technician to your doorstep to diagnose the problem. You must pay the decided service call fee before the service starts. 
  5. Repair/Replacement:
    The company will proceed with the desired repair/replacement if the issue is covered. They will co-ordinate with the professional to offer the best solution within no time.

Note: If the plan does not cover the damage, you must get it repaired from your pocket.  

Renewals & Cancellations 

Renewing or canceling a home warranty is a simple process. You can perform both these activities through a phone call or the web portal. 

Following are the steps that you will need to follow while renewing:

  • Login into your account: Login to your account on the company’s website or call the representative if the chat option is unavailable. 
  • Select the right home warranty coverage: You can select the same home warranty company as usual or select your choice. The premium will increase if you decide to upgrade your plan. 
  • Customize: If you want to add some optional items, select the option and customize your coverage. 
  • Pay: Now that you have selected the home warranty renewal option, you can choose whether you want to be charged monthly or annually. After selecting the option, pay the premium and select the deductible (if applicable). 

To cancel your home warranty account, follow these steps:

  1. Get in touch with the home warranty company with the help of a phone number or online. The customer service might tell you to give a written cancellation letter. 
  2. You must send certain information like policy numbers or claims. After being verified, the cancellation process can take up to five weeks. 
  3. Once the information is verified, you will get a call from the company to inform you about the deductions. 
  4. After this, the information will be processed, and you will receive the amount through check or directly in your bank account. 

Note: Most companies offer a 30-day cancellation process, so read the sample contract carefully. 

Advantages & Drawbacks of Home Warranties 

Similar to other things, even home warranties have their pros and cons.

Advantages & Drawbacks Of Home Warranties

In this section, we will discuss some things that you will need to be aware of:

Pros of Home Warranties 

  • Cost-saving:
    A home warranty typically ranges from $50-$100 monthly, which is relatively low as compared to the average annual emergency repair cost of up to $3,018. It is highly beneficial if you live in an older home and don’t have enough money to complete any major repairs. 
  • Security:
    Knowing that the provider covers the repairs/replacements, you won’t have to worry about the savings. It will give you peace of mind and time to deal with more important things.
  • Professional for help:
    Having a home warranty will help you avoid finding a professional every time a repair is needed. As the providers have a vast contractor network, you can avoid tension. 

Cons of Home Warranties 

  • Exclusions:
    The home warranty doesn’t fully cover the repairs and has certain limitations. Some of the exclusions are not covered and are the homeowner’s responsibility. So, make it a point to carefully go through the contract to save yourself from any surprises.
  • Claim Denials:
    A home warranty has a long list of terms and conditions, and homeowners often miss some points. It can ultimately result in claim denials. So, we recommend thoroughly reading and understanding your contract.   

Comparing Home Warranties 

After analyzing a lot of home warranties, the HomeWarrantyReviews.com team has selected the following list:

Plans: ShieldSilver, ShieldGold, ShieldPlatinum

State Coverage: 48 U.S. states

Service fee: $125, $100


  • Undetectable pre-existing conditions are covered
  • Separate plan for systems


  • Limited add-on options

American Home Shield is a good option for homeowners looking for an experienced home warranty company and want deductible options.

There are three plans from which the homeowners can choose, including ShieldGold, ShieldSilver, and ShieldPlatinum. The company offers different benefits and even provides coverage for pre-existing conditions. 

Plans: Bronze Care, Gold Care, and Platinum Care

State Coverage: 47 U.S. states

Service fee: $60-$75


  • Discounts on multi-year plans
  • Vast contractor network


  • The lower dollar limit for appliances

Select Home Warranty is for homeowners on a budget crunch as the plan costs as low as $44. They are available 24/7 and offer protection to the repairs for 90 days.

Plans: Basic Plan, Total Plan

State Coverage: 49 U.S. states

Service fee: $75-$125


  • Free coverage for roof leaks


  • No contractor choice

Plans: Gold Plan, Platinum Plan

State Coverage: 46 U.S. states

Service fee: $75


  • Discounts on annual plans
  • 90-day service guarantee


  • Does not offer appliance or system-only plan

ServicePlus Home Warranty offers homeowners customizable coverage along with various optional add-ons. The company has a 90-day service guarantee and has one of the best contractor networks.


A home warranty plan includes the major home systems and appliances if you want to get them repaired or replaced. It covers normal wear and tear of household items. 

Even though a home warranty is not mandatory, it will help you save on hefty repairs and bring peace of mind. However, before purchasing a home warranty, you should take a free quote, understand the terms, and decide accordingly. 

Top home warranty Companies

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