Home warranties helps cover the repair or replacement of various appliances and systems in your home due to wear and tear. Since homeowners insurance only covers sudden and accidental damage, home warranties — also known as home appliance insurance or residential service contracts — provide an excellent value to homeowners.
Finding the cheapest, best home warranty policy for you comes down to a few different factors, including the age of your appliances, your budget and which home appliance insurers operate in your state. Also, many providers have different ways of dealing with the replacement of covered items that can’t be repaired. That can affect which company you choose.
This article will cover:
- How does a home warranty work?
- Best home warranty companies
- How to pick a home appliance insurance plan
What is home appliance insurance?
Home appliance insurance, also frequently called a home warranty, covers the repair or replacement of certain appliances and systems in your home. The extent of the appliances covered depends on the plan you choose and tends to vary from insurer to insurer.
Home appliance insurance and homeowners insurance are very different. Home warranties cover damage to appliances and systems in your home due to wear and tear.
It’s a common mistake to assume that your homeowners insurance policy covers any damage to covered items. In fact, home insurance only covers sudden and accidental damage. If your oven is destroyed in a fire, for example, your home insurance should cover it. If your oven stops working simply because it’s old, your home insurance won’t cover it at all.
That’s where home appliance insurance comes in. With a home appliance insurance policy, you pay to cover certain appliances and systems. If any of them break down for covered reasons, such as old age, you pay a service fee for a contractor to repair the item. If it can’t be repaired, your insurer will replace it up to a certain dollar amount. Home warranties often cover a minimum of appliances, including:
- Refrigerators
- Ovens, ranges and stovetops
- Dishwashers
- Microwaves
- Garbage disposals
Depending on which home appliance insurance plan you purchase, you can cover additional items in your home, such as:
- Electrical and plumbing systems
- Ductwork
- Water heaters
- HVAC systems
- Swimming pools
Best home warranty companies
Homeowners insurance companies don’t sell home appliance insurance. However, many companies specialize solely in providing home warranties. These companies may look similar at first glance, but there tend to be many differences around the range of items insured, cost, plan options and coverage limits.
Amazon Home Warranty (AHW)
Amazon Home Warranty offers customized service plans. You can get a home warranty to cover only appliances, only home systems or both. AHW is one of the few home appliance insurers that provides coverage in all 50 states.
The cost of an AHW policy depends on which plan you choose. All plans have a $75 service fee per visit. Plans and costs include:
| Plan | Coverage | Monthly rate |
|---|---|---|
| Essential appliances | 8 appliances | $29 |
| Major systems | 8 systems | $36 |
| Combo | 8 systems + 15 appliances | $48 |
The coverage limit for most appliances is $1,500. However, systems tend to have different limits. For example, HVAC systems have a $2,500 limit, while electrical and plumbing systems have $500 limits.
Amazon Home Warranty plans have many exclusions, so look over the coverage plans to make sure you get the protection you need. On the flip side, the company covers issues that many other home appliance insurers do not, such as limited roof leak coverage and wine refrigerators.
America’s 1st Choice Home Club
America’s 1st Choice Home Club operates in all states except California and Hawaii. It offers four plans:
| Plan | Coverage | Monthly rate |
|---|---|---|
| Silver | 9 appliances | $33 |
| Systems | 6 systems | $38 |
| Gold | 15 appliances and systems | $46 |
| Platinum | 18 appliances and systems | $52 |
One of the major perks of America’s 1st Choice Home Club is that it allows you to choose a contractor, as long as they fit criteria such as being licensed and bonded. On the other hand, plans don’t cover pre-existing issues. Regardless of which plan you have, the service fee is $75.
American Home Shield
American Home Shield operates in all 50 states and has three different service plans. Plan costs range from $500 to $700 a year, depending on factors such as coverage needed, house size and service fee chosen ($75, $100 or $125). Higher service fees result in lower premiums. American Home Shield’s plans are:
| Plan | Coverage |
|---|---|
| ShieldSilver | 14 major systems |
| ShieldGold | 14 major systems + 9 appliances |
| ShieldPlatinum | ShieldGold coverage + roof leak protection, HVAC tune-up, AC refrigerant and more. |
A key advantage of American Home Shield policies is its coverage of typical exclusions, such as insufficiently maintained items or damage due to pre-existing conditions.
On the downside, its replacement policy is less than perfect. If AHS cannot repair a system or appliance, they will replace it. However, your replacement appliance may have similar features but at a lower quality. Furthermore, if they are not able to find a replacement, they will offer a cash payout.
This payout will probably be at actual cash value, meaning that depreciation will be taken into account. For example, if your oven is 60% of the way through its life cycle and deemed irreplaceable by AHS, you may receive a payout of only 40% of what the oven originally cost.
American Residential Warranty
American Residential Warranty has some of the most comprehensive coverage options in the business, all of them with a low $55 service fee. On top of covering appliances and systems, the Deluxe Advantage package covers issues such as improper installation, mismatched systems, as well as permit, modifications and code violations. The plans are as follows:
| Plan | Coverage | Monthly premium |
|---|---|---|
| Kitchen Plus | 8 appliances | $35 |
| Heating & Cooling | HVAC, humidifier and interior electrical system | $40 |
| Platinum | 11 systems and appliances | $50 |
| Platinum Premier | 17 systems and appliances | $60 |
American Residential Warranty also offers bundles. You can combine Platinum Premier plans with electronics coverage and sewer and water lines protection.
The downsides of American Residential Warranty are that it has low coverage limits on many covered items and claims cannot be filed online.
Choice Home Warranty
Choice Home Warranty offers two home appliance insurance policies, each with an $85 service fee:
| Plan | Coverage | Premium |
|---|---|---|
| Basic | 14 systems + appliances | $41 |
| Total | 18 systems + appliances | $50 |
Choice Home Warranty also offers add-on coverage for systems such as septic, sump and well pumps. The only real downsides of Choice Home Warranty plans are that they’re not available in California or Washington and you can’t choose your own contractors.
First American Home Warranty
First American Home Warranty has two home appliance insurance plans, each with a choice of a $75 or $100 service fee. The plans include:
| Plan | Coverage | Premium |
|---|---|---|
| Basic | 8 appliances | $28 |
| Total | 8 systems + 8 appliances | $43 |
One of the biggest perks of First American Home Warranty is a $3,500 spending limit for repairs or replacements per appliance covered, which is higher than many competitors. This could be a positive if you have high-end appliances. A mark against First American Home Warranty is that it only operates in 35 states.
How do I choose home appliance insurance?
When choosing a home warranty, there are a few factors to consider to make sure you get the best policy. These include:
- Cost: Home appliance insurance is in place to save you money. You don’t want to take only the cost of the policy into account, but the service fee per visit as well. If you have an older home and appliances, odds are you may be using your home warranty a lot. Look at the service fees of the providers you’re considering and make sure you’re not setting yourself up to pay too much in fees.
- Coverage: How well does the home appliance insurer you’re considering pay out on high-dollar system or appliance replacements? Seeing as replacements are probably going to happen at actual cash value cost, are you getting quality replacements? Also, do they cover the appliances you need covered, and are you paying to cover appliances you don’t have?
- Customer satisfaction: Read online reviews of the insurers you’re considering to see how well their customers like the service they’re getting. If it looks like a company has a bad trend with their customers, look at another company. Also, make sure to talk to family and friends about which home warranty company they use.
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