How Home Warranties Work: Coverage, Costs, and Claims | HomeJolly
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How Home Warranties Work: Coverage, Costs, and Claims

A home warranty can take the sting out of a broken furnace or a dead dishwasher, but only if you know what you're buying. Here's how these plans actually work.

7 min read
Illustration of a protective shield between a refrigerator and a washing machine
KEY TAKEAWAYS
A home warranty is a service contract that pays to repair or replace covered systems and appliances when they wear out.
You pay a yearly or monthly fee, plus a service call fee each time a technician comes out.
Coverage caps, exclusions, and waiting periods matter as much as the price.

What a home warranty is

A home warranty is a one-year service contract, usually renewable. When a covered item breaks down from normal wear and tear, you call the warranty provider, and they send a technician to diagnose it and repair or replace it.

It is not insurance. Homeowners insurance covers sudden damage from events like fire, storms, or theft. A home warranty covers things that simply wear out.

What's typically covered

Exactly what's included varies from contract to contract, so read the covered-items list closely.

  • Systems plans: heating, cooling, ductwork, plumbing, electrical, and the water heater
  • Appliance plans: refrigerator, range, oven, dishwasher, microwave, washer, and dryer
  • Combo plans: both systems and appliances
  • Optional add-ons: pools and spas, well pumps, septic systems, sewer lines, and limited roof-leak coverage

What it costs

You'll pay two kinds of costs. The premium averaged about $73 a month, or $876 a year, in 2026, with most plans falling between $28 and $191 a month. The service call fee, typically $0–$200 and about $108 on average, is charged every time a technician visits for a new claim. Some plans let you choose a higher premium in exchange for a lower service fee, or the other way around.

How a claim works

  • Something breaks: you file a claim online or by phone.
  • The provider assigns a technician from its network, or lets you choose your own on some plans.
  • You pay the service call fee when the technician arrives.
  • The technician diagnoses the problem and reports back to the provider.
  • If it's covered, the provider pays to repair it. If it can't be repaired, it pays to replace it, up to the coverage cap.

How to compare plans

  • Service call fee: what you'll pay on every visit
  • Coverage caps: the most the plan pays per item and per year
  • Exclusions: pre-existing conditions, code upgrades, improper installation
  • Waiting period: many plans don't cover anything for the first 30 days
  • Replacement terms: whether you get a like-for-like replacement or a cash payout
  • Cancellation terms: refund policy and any fees
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Editorial note: HomeJolly may earn a commission when you request quotes through links on this page. Prices are estimates and vary by location and home. This article is general information, not legal, tax, insurance, or financial advice.