Angie's List: Are Home Warranties Worth It?

By Lauren Maloney

Published 04/16 2014 08:11PM

Updated 04/21 2014 07:03AM

Home warranties can provide you with peace of mind, but they can also be a headache if you don’t do your homework.

In today’s Angie’s List report, what home buyers need to know about the cost-benefit divide.


For ten years in a row, home warranty companies have been the worst-graded category on Angie’s List.

A home warranty typically covers the major systems and appliances in a home for one year after the sale.

It’s often included with the purchase of a home, but many homeowners don’t fully examine the documents at closing – filing them away until they need repair help.


“They are surprised when they have a problem and try to use their home warranty to find out that it doesn’t work as they expected it or the item they have a problem with isn’t covered. Also we see concerns over the quality of the technicians being sent out to do the repairs and also the fact that the consumer is giving up their decision as to whether they should repair or replace the item,” Angie Hicks said.


Lindsay Ohmer received a home warranty when she bought her house and she says it came in handy when the heat went out over the winter.


“We just hopped on the website and filed a claim really fast and within a few hours we had somebody out here taking care of it for us,” Homeowner Lindsay Ohmer said.


Angie’s List says the key to a good experience is to understand what is and isn’t covered.


“Be sure you take the time to read through the contract so you understand exactly how it works because there is nothing more frustrating than something breaks and then you have to go read the document. You want to be prepared ahead of time,” Hicks said.


Angie’s List says expect to pay between $250 and $450 per year for a home warranty.

The fee per incident ranges from $50 to $75.

They also recommend knowing the age of your appliances to determine whether a home warranty is a good deal.

You may find you have new appliances that are already covered under the manufacturer’s warranty.

What's really covered?

·         There's often confusion between home insurance and a home warranty. Insurance covers theft or destruction, whereas warranties cover basic systems in your home against failure.

·         Just like a car warranty, a home warranty offers protection for a fixed period of time, but only if certain conditions are met. The system in question needs to fall under the policy umbrella.

·         Any system covered needs to be maintained properly. This means, for example, that if you don't have your furnace cleaned every few years, your provider may deny you coverage in the event of a failure.

·         It's also important to understand that many home warranties don't cover major structural damage such as a crack in your basement wall or a leaky roof.


What does it cost?

·         Expect to pay between $250 and $450 per year for a home warranty. At the end of each year, you'll be given the option to renew or end your coverage.

     -     Services provided under the warranty still come with a small cost. The fee per incident ranges from $50 to $75 and will be paid to either the warranty company directly or the contractor who comes to your home.

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