When you own a home, it’s important to protect it, but homeowners’ insurance only goes so far. While insurance can cover you against things like damage to your home’s foundation or structure due to accidents, it doesn’t protect you against appliances or systems in your home malfunctioning or breaking down due to age or wear and tear.
That’s where home warranties come in.
A home warranty can cover homeowners, buyers, and sellers against repair or replacement costs if appliances or systems break down in their home, saving them potentially thousands of dollars per year.
Though home warranty companies provide valuable protection that homeowners need, there are dozens of companies that provide this coverage, making it hard for homeowners to know where to look. We reviewed two dozen national and regional home warranty providers and rated them based on a number of factors in order to find the best.
Our Review Process
We assigned each company a grade in the following areas:
- Customer service and reputation
For each category, we assigned a rating of one (lowest) to five (highest). These ratings were then weighted and totaled to establish overall company ratings of one to five stars.
A company’s transparency is the degree to which it is upfront about pricing and terms of coverage. We consider this a critically important issue for people who are shopping for home warranties, because the industry can be relatively opaque, and homeowners need to know the conditions of a plan before purchasing it.
We used two metrics to rate each provider’s transparency: clear pricing and the availability of sample contracts. In total, companies’ transparency scores accounted for 15% of each company’s overall ratings in our reviews.
Ultimately, people purchase home warranties to save money—they buy coverage to repair or replace appliances and systems when they break down, rather than having to pay the costs out of their own pockets. So, when we reviewed companies, we looked for clear listings of what various plans cost, to measure the relative benefits of each one.
The companies that got the best ratings in our reviews had plan prices publicly listed right on their websites. Those that received low ratings required customers to go through a quote process to get an idea of pricing. This metric accounted for 7% of each company’s overall rating.
Another thing that we looked for on each company’s website was a sample contract that could be viewed or downloaded. Many of these sample contracts included the terms and conditions of coverage—what was excluded from coverage, coverage limits, and other homeowner rights and obligations under a policy.
In our review of companies, the availability of sample contracts was a simple yes-or-no question, with companies that offered easily accessible sample contracts getting a boost to their overall ratings. Whether a company had sample contracts available on its website accounted for 8% of its overall rating.
Because homeowners purchase home warranties to save money, we considered the actual pricing of each provider’s plans to be extremely important, because the more a plan costs, the less likely it is to be beneficial for someone to purchase. Instead, homeowners would be better off simply covering their own repair or replacement costs as appliances or systems break down rather than using a home warranty to cover the cost.
To measure the costs of plans offered by each provider, we looked at two things: monthly plan cost and service fees that customers are required to pay if they file a claim.
Plan cost is the amount that homeowners pay in exchange for warranty coverage. Warranties typically last for 12 months but may be structured with annual or monthly payments. The costs of plans available from companies we reviewed varied widely based on the items covered and service fee level, but we looked for companies that offered a varying level of coverage at different price points.
Generally, we looked for companies that offered coverage for less than $30 to $40 per month. Companies that got the best ratings charged less than $30 per month, while those that charged over $50 per month saw their ratings suffer. Overall plan cost accounted for 15% of each company’s overall rating.
The second cost of home warranties that homeowners need to be aware of is the service fee that they're charged whenever they file a claim. It is similar to a homeowner's insurance policy deductible and is an important part of the overall cost of a home warranty that often significantly impacts the total overall cost of coverage. However, people don't always think to consider it before making a purchase.
In addition to flat service fees, some home warranty companies offer customers the option to choose their service fee ($75/$100/$125, for example) when they elect a plan. The customer's selection, along with the coverages included in their warranty, is what determines the plan's annual cost.
In evaluating providers, we looked for companies that charged under $80 per incident service fee. Those services that charged service fees of under $75 or had tiered options available got the highest marks, while those with service fees of over $125 saw their ratings suffer. Overall, service fees accounted for 12% of companies' total ratings.
In the context of a home warranty, coverage applies to those items that the home warranty company will pay to repair or replace if they break down. Most home warranty providers include coverage options for both appliances (like refrigerators and washer/dryers) and major home systems (like heating or ductwork), although those coverages are often separated into different plans.
In addition to the items covered by plans, we checked to see which states home warranty companies offered coverage in, or whether coverage was available nationwide.
Number and Types of Plans Available
Most good home warranty companies offer more than one plan. For example, they may offer one plan that covers appliances and another that covers systems. Optional coverage may be available for things like dishwashers or pool or spa equipment. Plans may also be available specifically for home sellers.
When reviewing companies, we gave top ratings for plan availability to those companies that offered three or more plans. Those that offered just one plan—maybe with some optional add-ons—got the lowest ratings. The number and type of plans offered by each company accounted for 11% of its overall rating.
When homeowners are shopping for a home warranty, they want to know that coverage is actually available where they live. Yet, while some home warranty companies offer coverage nationwide, many only offer coverage in certain states.
When we evaluated home warranty companies, those that earned the highest ratings for coverage availability offer plans nationwide and without restrictions. Those companies that only offer coverage for homeowners in a handful of states got much lower ratings. The geographic availability of each company’s coverage represented 14% of its overall rating.
Much like homeowners' insurance, many home warranty plans can often be customized. Customers may have the option to add or eliminate coverage for certain times, build their own plans, or add extra coverages for additional fees. Some companies offer extra add-ons as well as the option to bundle multiple types of plans for seamless coverage.
In our reviews, we graded companies according to whether they offered the option to customize coverage. This factor accounted for 4% of each provider's overall rating.
Customer Service and Reputation
When customers are thinking of buying a home warranty, it’s extremely important for them to buy coverage from a reputable company. Customers want to be sure that the company will stand behind the warranty they sell. It’s also critically important that the company will actually work to complete work when needed—that even if they don’t have a contractor near you to perform work, they will let you hire your own and still cover the cost, for example.
To measure each company’s customer service and overall reputation, we considered a number of factors, including:
- Number of years in business
- Ease of claim-filing process
- Customers’ ability to select their own contractors
Taken together, these factors made up nearly 30% of each company’s overall rating.
Time in Business
We considered the number of years that each company had been in business, because it demonstrated the ability to survive under varying economic conditions. This should give customers peace of mind that the company will be around if a homeowner has to file a claim.
The companies that earned the highest scores in our review were those that had been around 10 years or longer, while those that had been around for fewer than five years got the lowest ratings. Each company’s time in business accounted for 5% of its overall rating.
When a homeowner files a claim under a home warranty, they or the home warranty company have to arrange for a contractor to go and repair or replace the malfunctioning item. Many home warranty companies have networks of contractors that they utilize for repair work and require that homeowners utilize approved contractors for any work done under their warranty. Many will even deny coverage if a homeowner uses an unapproved contractor or if work performed is outside the scope of their coverage.
However, some home warranty companies offer a greater degree of flexibility in allowing homeowners to select their own contractors, especially if one from the warranty company’s network is not immediately available. This is important for homeowners, because the ability to hire your own contractor allows you to get the work completed more quickly and (often) more to your own satisfaction.
The companies in our review that got top marks for flexibility were those that allow homeowners to choose their own contractors, while lower ratings went to companies that require homeowners to use a contractor in their network or require prior approval of contractors before homeowners can use them to complete work. This flexibility in choosing contractors accounted for 8% of each company’s overall rating.
Ease of Use
When homeowners have to file a claim under a home warranty, they want to know that they can do so quickly and easily. We tried to find companies that allow homeowners to file claims online or through 24-hour customer service centers.
For each company in our review, we included a simple yes-or-no rating of whether companies made filing claims easy. Because we reviewed mostly national and large regional providers, we didn’t find many companies that made filing a claim difficult, so most of the companies in our review met this requirement. Ease of filing a claim made up 10% of each company’s overall rating.
Choosing the Right Home Warranty for You
We rated each company based on a variety of factors that we consider the most important to prospective home warranty purchasers. These include the company’s offerings, its time in business, its ease of use, reputation for customer satisfaction, coverage availability, and pricing.
Based on our reviews, we compiled a list of the best home warranty companies available, which should serve as a sound starting point to begin your search. However, which home warranty is right for you will vary based on your individual circumstances, so it’s important to do your own research before purchasing.
To see which companies ranked the best in our reviews, be sure to check out our list of the best home warranty companies.