Real protection,
or $600 marketing?
A home warranty is a service contract — not insurance. It covers age-related breakdowns of major systems with caps, deductibles, and a contractor network. Sometimes it pays off. Often it doesn't. Here's how to tell.
Four things
the brochure won't say.
It's not insurance.
Insurance covers sudden, unexpected damage (fire, hail, theft). A home warranty covers age-related breakdowns of major systems and appliances. Different product, different rules, different limits.
It's a service contract.
You pay an annual premium ($400–$700) and a service fee per claim ($75–$150). They send a contractor from THEIR network. Repair or replace at the warranty company's discretion.
Coverage caps are real.
Most warranties cap individual repairs at $1,500–$3,000 per item, with annual aggregate caps too. A full HVAC replacement can exceed the cap, leaving you on the hook for the difference.
Exclusions kill claims.
Pre-existing conditions, improper installation, code violations, lack of maintenance — all common denial reasons. Read your contract before assuming coverage.
When it wins.
When it doesn't.
Older home (15+ years)
HVAC, water heater, appliances all aging into failure window. The math works.
First-time buyer with thin reserves
If $1,500 in surprise repairs would force a credit-card decision, the warranty premium buys peace of mind.
Seller offers it as part of negotiation
Free first year on a $500K house? Take it. Re-evaluate at renewal once you know what's working.
New construction
Builder warranties cover the first 1-2 years on most systems. Stacking a third-party warranty on top is duplicate coverage.
You have $5K+ in reserves
Self-insure. The premium math favors you — most homeowners don't make claims that exceed what they pay in over 5 years.
Recent comprehensive renovation
If everything's new, you don't need warranty for a decade. Buy when the systems start aging.
Four pitfalls
that void claims.
Believing 'covered' means 'replaced.'
Warranties almost always repair before replace. If the cheap fix lasts 3 months and breaks again, you pay another service fee.
Not asking about the contractor network.
You don't pick. The warranty company sends whoever's in network. Quality varies wildly. Ask about average response time + customer ratings.
Skipping the contract read.
The exclusions section is where claims die. 30 minutes with the contract before signing prevents 30 hours of fighting a denial later.
Renewing on autopilot.
Year 1 with a free seller-paid warranty is a freeroll. Year 2 at $600 with no claims used = re-evaluate. Don't autorenew without thinking.
Insure for catastrophe.
Reserve for everything else.
We coach buyers to budget 1% of home value annually for maintenance + reserves. That's usually the better warranty.