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By Edgar Nieves
Updated: December 11, 2020 12:37 PM ET | Originally published: June 8, 2020

A home warranty could be a lifesaver when you face stressful and expensive home repairs.

Or, the home warranty could add to your frustrations by excluding the very appliance or system you need to be fixed or replaced.

To get the most value from a home warranty, you’ll need to go with a top home warranty company, read sample contracts, and choose the right coverage options for your home.

4 Best Home Warranty Companies

We recommend these top four home warranty companies for 2021:

  1. American Home Shield: Most Customizable Plan
  2. First American Home Warranty: Most Comprehensive Basic Plan
  3. Liberty Home Guard: Most Add-Ons
  4. AFC Home Club: Lowest Premiums
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American Home Shield – Most Customizable Plan

As the country’s largest home warranty provider, American Home Shield (AHS) accounts for 42 percent of the market. What really makes this company stand out, however, is its customizable coverage.

AHS lets you build your own plan. Most providers require customers to choose plans with a preset list of covered items — a systems plan, appliance plan, or combo plan. This can be frustrating and costly because you may pay for coverage you don’t need.

With American Home Shield, clients can choose any 10 items from their systems and appliances options.

This enables you to get only the coverage you really need without additional expense.

Monthly payments vary depending on your state, but you can customize your repair service fees, choosing $75, $100, or $125 per service call. The lower the service fee, the more you’ll have to pay for your contract each month.

With AHS, heating and air conditioning units with a capacity of up to 5 tons have a payout limit of $1,500, while appliances have a $3,000 dollar limit per covered item.

Another great thing about AHS: This company is much more lenient than most in terms of liability limitations. According to its sample contract, coverage includes repairs due to insufficient maintenance, rust, corrosion, sediment, improper installations, and undetected pre-existing conditions.

These are unusual provisions in the industry since most home warranty providers don’t cover these types of repairs.

First American Home Warranty – Most Comprehensive Basic Plan

With comprehensive coverage for 10 costly-to-repair appliances for only $28 a month, First American Home Warranty’s Basic plan is an affordable option that gives you the most bang for your buck.

However, this plan offers coverage for appliances only: washers, dryers, refrigerators, dishwashers, cooktops, built-in microwave ovens, oven ranges, garbage disposals, and trash compactors.

Customers who need both appliances and systems coverage will have to opt for their Premiere plan.

First American’s service fee is standard for all plans: $75 for each contractor visit. Appliances have a limit of up to $3,500 for diagnosis, repairs, and replacements.

First American may not have the built-in flexible liability limits like AHS, but customers have the option to add a “First Class Upgrade” for $9 a month which includes coverage for malfunctions due to improper installations, modifications, and previous repairs.

This plan also covers damages caused by lack of maintenance, rust, corrosion, and chemical or sedimentary build-up which may be important if you’re buying an older home.

The company has a significant drawback: It doesn’t have a plan that covers systems only. This means that, unlike most other providers, First American doesn’t cover air conditioning repair; however, you can add this particular coverage to your contract for $9 per month.

Or, if your HVAC system is new enough to be under a manufacturer’s warranty, you may not need your home warranty to cover your warranty’s pricing.

Liberty Home Guard – Most Add-Ons

Liberty Home Guard offers three types of plans: Appliance Guard, System Guard, and a combo plan called Total Home Guard.

Liberty covers popular systems and appliances such as air conditioning, heating, plumbing, electrical, washers, dryers, and refrigerators.

But Liberty stands out because of its optional add-ons. Customers can choose from around 20 items to add to their coverage.

This is the most extensive list of add ons we found in the home warranty market.

The list includes items commonly found in other providers (pools, spas, well pumps, sump pumps, central vacuums) and other, more rarely covered items such as limited roof leaks, replacing locks, gutter cleaning, pest control, and electronics protection.

We noticed some add-ons weren’t listed in Liberty’s sample contract. However, when we asked the company’s online representatives they indicated these items would be disclosed in the contract if the customer chooses it.

As for their service fee, it ranges from $65 to $125, with a payout limit of $1,600 per covered item.

LHG has one major drawback: it services only 36 states. If you live in Washington, California, Oregon, Wyoming, Wisconsin, Iowa, Illinois, Indiana, Kentucky, Vermont, New Hampshire, Rhode Island, Delaware, or Hawaii, please see one of our other recommended options.

AFC Home Club – Lowest Premiums

AFC Home Club (America’s 1st Choice) caught our attention for its cost-efficiency. All four of the company’s plans feature monthly premiums lower than the industry standard. AFC’s plans include:

  • System Plan
  • Silver Plan (Appliance)
  • Gold Plan (a hybrid of systems and appliances)
  • Platinum Plan (a hybrid plus coverage for plumbing stoppages, built-in microwave ovens, and ice makers).

Customers can decide between a one-year contract or a three-year contract term, saving even more per month if they opt for the three-year option.

As with other providers, AFC prices change depending on the service fee customers agree to pay ($75, $100, $125). But this company’s prices are still low compared to other companies.

For example, for AFC Home Club’s System or Silver Plan customers would pay less than $40 a month, and $50 or less for their Gold and Platinum plan.

Unlike most home warranty providers, AFC Home Club members can choose technicians for their repairs.

Additionally, AFC claims that they’ll guarantee repairs and cost of parts for the lifetime of the contract, meaning that customers won’t have to pay if the same issue occurs again.

This is another benefit since most companies offer a 30- or 60-day guarantee.

Other Popular Home Warranty Companies

The following warranty companies didn’t make our list of top home warranty companies, but they’re well known in this market:

Choice Home Warranty

This leader has solid customer service but didn’t make our list because it lacks flexibility within its coverage options.

Select Home Warranty

Select Home Warranty could provide the best workmanship in this market, but the fees can get out of hand.

Plus, it has low coverage caps for many home services.

Amazon Home Warranty

Amazon has joined the home warranty market. As you can imagine, it offers a great price point, but you’d have no control over who Amazon sent out to your home for repairs and assessments.

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What is a Home Warranty?

A home warranty is a service contract. You’d pay the warranty’s premiums in exchange for getting help when you need to repair your home’s major systems and major appliances.

A warranty is different from homeowners insurance, which protects your home against losses from damage related to fire, theft, and other perils.

Unlike homeowners insurance, a home warranty plan could protect your budget from unexpected expenses after your air conditioner, washing machine, or electrical system breaks down from normal wear.

A home warranty could save you money if your appliances and systems are reaching their life expectancy.

And, if you’re selling your home, real estate agents often recommend buying a home warranty for two reasons:

  • in case a system or appliance breaks during or after the listing process
  • because it adds value and attracts homebuyers who worry about unknown home repair costs if they buy your house.

What Home Warranties Cover

Companies use a wide range of names to differentiate their plans — Gold, Platinum, Bronze, Basic, Premier, etc.

But most plan options fall into three basic categories:

  • A system plan: could help repair the major systems in your home: plumbing system, electrical system, HVAC, etc.
  • An appliance plan: could help repair or replace large appliances such as your refrigerator, washing machine, clothes dryer, oven / range, etc.
  • A hybrid or comprehensive plan: this combo plan covers system and appliances; it can also include optional add-ons.

Generally, home warranty companies offer coverage for the same array of home systems and appliances.

Most Common Home Systems Covered:

  • Heating and air conditioning (HVAC)
  • Plumbing
  • Electrical wiring
  • Water heaters
  • Ductwork
  • Doorbells
  • Central vacuums

Most Common Home Appliances Covered:

  • Refrigerators
  • Laundry machines
  • Ranges, stoves, ovens & cooktops
  • Built-in microwave ovens
  • Garbage disposals
  • Garage door opener
  • Dishwashers

Add-Ons Covered:

Some companies offer optional coverage options you can include for an extra fee. The most common add-ons are:

  • Pools and inground spas
  • Septic systems
  • Well pumps
  • Sump pumps
  • Ceiling fans
  • Smoke detectors

Are Home Warranties Worth It?

At this point you may be wondering if a home warranty is even worth it, considering the exclusions and customer satisfaction issues.

The answer is: Home warranty plans can be worth it. But you’re more likely to be happy with your home warranty plan if:

  • You do your own research before buying
  • You read sample contracts so you’ll know what your plan covers
  • You get your questions answered before finalizing a contract
  • And if you find a reputable company.

So how do you measure the value of a home warranty? If you can pay less for the warranty than you’d pay in-home repairs without it, you’ve gotten a good deal.

  • Best case scenario: You could pay only a service fee ranging from $75 to $150 (along with your annual premiums) and get a major system or appliance fixed or replaced.
  • Worst case scenario: You pay the warranty’s premiums for several years, pay a service fee for a home service call, and then learn your warranty’s limitations prevent the plan from helping when you need it.

Usually, customer experience falls somewhere between these two extremes. However, most warranty customers who are happy with their plans have higher payout caps and fewer liability limitations.

A lot of unsatisfied customers learned about their warranties’ exclusions only when they needed to file a claim. So be sure to learn what your warranty covers before you buy it.

Home Warranty Quick Facts

As you browse home warranties, keep these things in mind before signing on the dotted line.

State Licensing

Each state has its own regulations for overseeing the home warranty industry.

You should research and review home warranty regulations to make sure the company is licensed and legally allowed to do business in your state.

In many states, the insurance commissioner or Department of Consumer Protection oversees home warranty companies.

To locate the regulator of your particular state, you can consult this State Licensing Guide.

30-Day Waiting Period

Most home warranty companies require a 30-day waiting period before homeowners can file a claim.

If any system or appliance malfunctions during this waiting period, the repairs or replacement costs won’t be covered nor will you be able to request service.

(Companies traditionally do this to discourage fraud, i.e. customers purchasing a service contract after their appliance or system is already broken.)

In other words, your contract won’t be effective until 31 days after you make the first payment. If something in your home were to malfunction during your waiting period the warranty would cover only part of the repair.

Limitations of Liability

All home warranty contracts exclude some home repairs, and all home warranties place caps on how much they’ll payout.

Be sure you read a company’s sample contracts, as boring as they may be, before signing up for the warranty and sending in your first premium payment.

You’ll want to know exactly what your plan covers. If you have questions, make sure you get them answered by the warranty company before you buy the home warranty plan.

You should exclude any company that doesn’t answer your questions and does not have its contract readily available before you buy the plan.

Usually, appliances with existing manufacturer warranties, malfunction resulting from rust, corrosion, toxic materials, improper installation, or pre-existing conditions (known or unknown) are not covered by a home warranty.

Companies are also not liable for repairs of cosmetic defects, maintenance routine, or malfunctions caused by acts of nature (fire, flood, earthquake, storms, etc.). That’s why you have homeowners insurance.

Some home warranty companies require a home inspection which reveals the condition of your systems and appliances before the contract begins.

Dissatisfied Customers

Although home warranty companies advertise peace of mind by helping homeowners save money in home repairs, many customers consider their experience with selected home warranty companies a headache.

In fact, home warranty companies receive thousands of complaints and negative reviews from dissatisfied customers.

Complaints usually relate to claims being denied, repairs taking days or weeks to schedule, repairs incorrectly performed, and consumers who wait over an hour on hold when trying to reach a customer service representative.

Check with the Better Business Bureau (BBB) or Consumers Advocate to read online reviews.

By their nature, online reviews skew negatively. But if you notice the same problem in several different customer experiences, pay attention.

How Money® Found the Best Overall Home Warranty Plans

Because most home warranty companies cover most of the same systems and appliances, our methodology focuses on the terms of their contracts, malfunctions and/or failures covered, payout limits, cost-efficiency, and service fees.

In order to find the best home warranty we focused on the following factors:

Transparency

We find that the best companies clearly disclose their terms, prices, exclusions, and coverage limits.

Ideally, companies should provide sample contracts on their websites. Coverage denial complaints sometimes stem from a misunderstanding of the contract terms.

Make sure you understand all clauses as written—what is covered, how to request service, each company’s service process, and your responsibilities.

Don’t do business with companies that are unclear with prices or use inaccessible terminology and language. In any case, if there’s something you don’t understand, talk it over with their representatives.

We included companies that provided sample contracts either during the process of getting a quote or elsewhere on their website.

Claims Processing

It’s good to remember that scheduling a repair can take between 24 and 48 hours, depending on the company. In some cases, if the repair is considered an emergency (say a broken heating system in the middle of winter), your claim could be expedited.

The selection of the repair technician is up to the company unless the contract explicitly stipulates otherwise. A technician will visit your house to assess the situation and confirm whether the damage is covered by your warranty.

Companies charge a $75 to $125 service fee for every repair call. This fee is established in your contract. Customers who agree to a high monthly payment pay lower service fees than those with a low monthly payment.

You could think of this service fee as a deductible or co-pay on your insurance policy.

We opted for home warranty providers offering a clear explanation of their claims processing and customers’ responsibilities.

Cost

A home warranty costs between $300 and $600 dollars a year.

We looked at the cost and service fee in comparison to the amount of items covered, exclusions, and payout limits to determine the value of coverage plans.

Customer Service

Although home warranty companies receive thousands of negative reviews and comments by dissatisfied customers, it wasn’t the only factor we considered.

We also called their customer service lines and tried their online chats to evaluate waiting times and inquire about their products.

We favored companies offering 24/7 customer support and other online services such as chats or apps.

How to Choose The Best Home Warranty For You

Get Quotes and Compare

Make sure to get at least three different quotes and compare them.

Consider questions like:

  • What is the cost?
  • What is included?—i.e. Which systems and appliances are covered?
  • What is their service call fee?
  • Is there an item that’s included in one company but not in another?
  • What are their add-ons and cost?
  • Can plans be customized?

Read Sample Contracts

Once you’ve chosen at least three companies, take a look at their sample contracts, which are usually found online.

Identify the limitations and exclusions in the contract, specifically the types of repairs it will or won’t cover. It’ll also be useful to know what happens in case an item is deemed irreparable, as well as their claim submission process.

Another important thing to check is payout limits. Your contract should disclose the amount of money the provider will cover for the repair of each system and appliance per each contract term, meaning that the established cap will be the amount you’ll have available over the course of the contract.

Make sure that the payout limit for often expensive repairs such as air conditioning and heating systems make sense for the area where you live. You’d be responsible for paying for repairs beyond the contract’s limitations.

Important Things To Know About Home Warranties

The Proper Maintenance Gray Area

Sometimes home warranty coverage is contingent on the “proper maintenance” of systems and appliances, meaning repairs won’t be covered if the malfunction was caused by failure to follow the manufacturer’s maintenance specifications.

This is a gray area in the industry because there are no clear guidelines as to what constitutes proper routine maintenance.

Some contracts give concrete examples such as changing filters, flushing the water heater, keeping proper refrigerant levels, or cleaning coils, but it ultimately depends on technicians’ inspections.

The worst-case scenario could be that a company denies a valid claim claiming improper maintenance. This is why it’s extremely important to keep records of any maintenance given to your appliance or system, so you’re able to provide proof if required.

Brand-new systems and appliances

If you’ve just installed new appliances or bought a brand new home, your appliances will probably already be protected by a manufacturer’s warranty.

Since a home warranty won’t cover anything that’s already covered under another type of warranty, you might want to consult with a professional as to whether you really need one.

Most homeowners would rather the manufacturer — Whirlpool, Samsung, GE, etc. — repair their own products anyway if the appliances remain under a manufacturer’s warranty.

Red Flags

You should definitely not purchase a home warranty if:

  • A company won’t provide a sample contract, either by posting it on their website or by sending it directly to you by email.
  • Your contract doesn’t specify a fixed service call fee, decided upon your purchase.
  • The contract doesn’t clearly stipulate payout limits or the repairs that are covered and not covered.

Summary of The Best Home Warranty Companies

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