Finance buying guide
How to choose a home warranty
A home warranty (mainly sold in the US) is a service contract that pays to repair or replace covered home systems and appliances when they fail from normal wear. It is not home insurance. Its value depends almost entirely on the contract details: exclusions, per-claim caps, service fees and how claims are handled.
Weighted criteria
What matters when choosing home warranty
Weights add up to 100 and reflect how much each factor usually decides satisfaction. Change them to fit you in the scorecard.
Coverage & exclusions
30%Exactly which systems and appliances are covered, and what is excluded (pre-existing conditions, improper maintenance, code upgrades).
How to check: Read the full sample contract, not the brochure. List what you own and tick off each item against the coverage and exclusions.
Payout caps & limits
20%Maximum the plan pays per item, per claim or per year.
How to check: Compare caps with the real cost to repair or replace your most expensive systems.
Service fees & total cost
15%Yearly or monthly premium plus the fee you pay for each service visit.
How to check: Estimate yearly cost including a realistic number of service calls.
Claims process
15%How claims are filed, who chooses the contractor, and how fast repairs happen.
How to check: Ask about response times, whether you can use your own contractor, and how disputes are handled.
Cancellation & renewal
10%Refund rules if you cancel and how renewal prices change.
How to check: Read the cancellation clause and any auto-renewal terms.
Licensing & complaints
10%Whether the provider is licensed or registered where required and how it handles complaints.
How to check: Check with your state's insurance or consumer protection regulator where applicable.
Avoid
Red flags
- Pressure to sign before you have read the full contract.
- Broad exclusions for "pre-existing" or "improper maintenance" with no definition.
- Low per-item caps on expensive systems.
- Unsolicited calls or letters warning that your "warranty is expiring".
- No clear process for disputes.
Before you pay
Checklist
- List your home systems and appliances with their ages.
- Read the full sample contract.
- Check caps against real repair costs.
- Calculate the full yearly cost including service fees.
- Check existing manufacturer warranties so you do not pay twice.
- Keep maintenance records.
Ask the seller
Questions to ask
- What is the maximum payout for each covered item?
- How are pre-existing conditions defined?
- Can I choose my own contractor?
- What refund do I get if I cancel?
After you buy
Warranty & returns
Home warranty plans usually run for one year and renew; they are service contracts with their own terms rather than manufacturer warranties.
- Keep receipts and service records to support claims.
- Know your statutory consumer rights, which still apply to new appliances.
Common mistakes
Myths vs facts
Myth A home warranty is the same as home insurance.
Fact Insurance covers sudden damage such as fire or storms. A home warranty covers breakdowns from normal wear, under its terms.
Myth Everything in the house is covered.
Fact Coverage is limited to listed items, with exclusions and caps.
Where this comes from
Official sources
Criteria and weights are AltFTool's editorial judgement, not a statement by these bodies. This guide is general consumer information, not professional advice.
FAQ
Home Warranty: common questions
Is a home warranty worth it?
It depends on the age of your systems, your savings for repairs and the contract terms. Compare the yearly cost with setting money aside yourself.
Does it cover new appliances?
New appliances usually have a maker's warranty already. A plan may duplicate that cover.
What if my claim is denied?
Ask for the reason in writing, use the provider's dispute process, then contact your consumer protection regulator.
Free tools
Use these with this guide
Weighted scorecard
Review pattern checker
Complaint letter writer
Warranty & returns tracker
True cost calculator
Also handy: appliance warranty tracker, home insurance inventory
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