By NerdWallet Staff

Updated January 2026

What Is a Home Warranty and Why Might You Need One?

A home warranty is a renewable service plan that provides discounted repair and replacement services for covered household systems and appliances. The details of each plan vary by provider, and your level of protection depends on the type of warranty you choose. Unlike homeowners insurance, which covers damage to your property and belongings from events like fires, storms or theft, a home warranty focuses on keeping essential systems and appliances functioning.

For many homeowners, a home warranty can be an effective way to safeguard their investment. Paired with a solid homeowners insurance policy, it can offer broad protection against both unexpected breakdowns and major property damage. That said, if you’ve purchased a newly built home or new appliances, manufacturer warranties may already provide coverage, so check these before signing up for a plan.

Know Your Coverage Needs

Your ideal home warranty plan depends on the age and condition of your household systems and appliances. Some homes may only need a basic plan that covers major essentials, while others may benefit from more comprehensive protection. Take inventory of what you own and prioritize coverage for older systems and appliances, since newer ones may still be under manufacturer warranty.

Consider Your Budget

Home warranty providers offer multiple plan types at different price points. Choose one that meets your top coverage needs while staying within your budget. Collect quotes from several companies to get a sense of average costs for the items you want protected. If you’re unsure where to begin, real estate agents, neighbors and friends can often recommend reputable providers.

Review Contracts and Terms Carefully

Before finalizing a home warranty contract, read it thoroughly. Pay close attention to exclusions, coverage limits, service fees and replacement policies so there are no surprises later.

How Much Do Home Warranties Cost?

Home warranties can save you from paying full price for repairs or replacements when a major appliance or system fails. On average, a home warranty costs just over $900 per year, but pricing can range widely—from about $214 to $1,662 annually—depending on coverage level, provider and home size.

What Do Home Warranties Cover?

Home warranties typically cover essential appliances and major home systems, such as:

• Refrigerators

• Dishwashers

• Washers and dryers

• Plumbing systems

• Electrical systems

• HVAC units

These plans help ensure you can afford the repair, maintenance or potential replacement of covered items — reducing out-of-pocket expenses and offering long-term peace of mind.

What Don’t Home Warranties Cover?

Coverage varies by provider and plan, but most home warranties exclude the following:

• Structural components such as foundations, walls, flooring and paint

• Commercial-grade appliances or systems

• Pre-existing conditions

• Normal wear and tear

• Issues caused by rust, corrosion or sediment

• Problems resulting from improper installation, maintenance, design or past repairs not covered under the contract

• Detection or removal of asbestos, mold or radon

• Building code or zoning violations