How much does a home warranty cost?

Home warranties prevent you from paying out-of-pocket when your home appliances or systems fail.

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Continue reading to learn how much a home warranty costs, and how to find the best one for your home, and what it covers with the help of the following home warranty company reviews.

A home warranty contract can keep you from paying hundreds and thousands of dollars on a damaged clothes dryer or a broken refrigerator and provides you with peace of mind that even if you break an important item, you would be covered. As long as you keep your systems and home appliances well-maintained, there is no reason that you should have to pay full price for major replacements or repairs.

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By the definition of a home warranty, it is a service that is offered by developers that cover the cost of a structural glitch in a home owing to poor construction quality or arising from natural calamity. It also pays for the repair and replacement costs of appliances such as ACs, fans, fittings, etc., that come along with a furnished flat.

According to Property Consultant Prashant Nath, Properties De Emirates, “With many occurrences of structural damages reported in Mumbai, Hyderabad and elsewhere owing to lack of sound engineering techniques and flouted norms, homebuyers have become concerned. 

Many potential buyers would rather continue with their rental accommodation in the default of any buffer. The developers were just providing only basic maintenance services as there was no one to take the responsibility of the structural flaws.” 

However, it is mandatory for the Central Government to include a home warranty under RERA has become an immense relief to the buyer. The warranty covers the first homebuyer as well as all the subsequent buyers of the home until the fixed period.

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Home Warranty Cost Breakdown

There are two main costs when it comes to home warranties they are 

  • The monthly premium 
  • The service fee

The monthly premium is the amount whether you use it or not; you pay every month or year for the length of the policy. The service fee is more similar to co-pay. 

Each time you need to submit a claim and call a technician to come to diagnose a problem, and you pay this fee directly to the technician.

Companies like America’s First Choice Home Club and American Home Shield allow you to personalize your premium and service fee payments.

If you choose to pay a higher service call fee, your premium will be lower, and if you choose to pay a lower service call fee, your premium will be higher.

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You can make this decision depending on the number of claims you see yourself giving in over the length of the policy.

Here’s a quick look at the range of premium costs provided by most of the popular companies in the home warranty industry.

Most of the companies offer numerous plans with varying premiums depending on how comprehensive the coverage range is. In general, the standard cost of a home warranty premium ranges between $25–$50 per month or $300–$600 a year.

The average service call fee is between $75–$125. 

What does a home warranty cover? 

There is an abundance of services covered by developers under home warranty, including: 

  • Ordinary defects:
  • Kitchen appliances
  • Electronic appliances
  •  Structural and workmanship defects:
  • Waterproofing
  • Cement work
  • Wall cracks
  • Wall paint’
  • Uneven roofline
  • Flooring defects
  • Electrical wiring issues
  • Faulty plumbing

Who benefits? 

In India, every product except real estate has a warranty. However, now even homes will incorporate a service contract which will significantly benefit both sellers and buyers. From the buyers’ perspective, a home warranty will ensure peace of mind and act as a buffer.

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Right from the day of possession, the builder will be accountable for all the previously mentioned problems and will financially safeguard the buyer. In fact, it comes as a massive relief to the buyer as now builders will guarantee better quality products. 

From the sellers’ perspective, the warranty will induce confidence in buyers and thereby resulting in higher sales. As the quality of the project has always been a major concern for imminent homebuyers, the move will highly benefit the sellers as prospective investors and end-users apprehensive of the structural defects will now continue their investments. 

While earlier, these advantages were provided only for premium projects, owing to their elevated maintenance cost, the Government now makes it mandatory for all residential projects which are falling under the scope of RERA. One must look forward to all the home warranty company reviews before buying it.


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