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Are Home Warranties Worth It? What They Cover, What They Deny, What They Cost

A wrench on a water heater pipe, with a sticky note reading “$7,500?”.
Photo by Marian Florinel Condruz on Unsplash

Picture a furnace that quits on a January night. The technician says the 19-year-old unit isn't worth fixing. You call your home insurer, and the answer is no, because a policy pays for sudden events, not for equipment that wore out. A new heating and cooling system averages about $7,500. A home warranty promises to fill that gap, and three things in the contract decide whether it really does.

Run the math on your own house

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By Ray Castellano · Updated Sep 29, 2026 · Reviewed against FTC, IRS, Insurance Information Institute, D.C. Office of the Attorney General, HomeAdvisor and NerdWallet cost data

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That gap is exactly what home warranty companies sell. The average plan comes to $73 a month, by NerdWallet's count this year, and every repair visit adds a service fee on top. What you get back depends on the fine print, not the brochure.

The company, not you, picks the contractor, the replacement brand and the timing. It may repair a unit you'd hoped to see replaced. And a cap can leave a big remainder. Say a boiler costs $12,000 to replace. Under a capped contract, the D.C. attorney general's office warns, you may get only $1,600 of it.

If the company says no, see what's next

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Ways to soften a big repair bill, plan or no plan

A warranty is one tool of several. Whatever you decide about it, these moves cost little and can spare you a rushed decision later.

  1. A replacement quote before the emergency. If your system is near the end, ask two or three licensed HVAC contractors for a written estimate now. Crews are less rushed in the off-season, and you'll know the real local price for your house instead of a national average. Same goes for a water heater past ten years.
  2. Rebates, but not the old federal credit. Ask about utility and state rebates. Don't count on the federal energy efficient home improvement credit, though: equipment placed in service after 2025 doesn't qualify.
  3. A maintenance plan. Many local HVAC companies sell yearly service agreements with tune-ups and priority booking. They won't buy you a new system, but they can stretch the old one's life and build the service records a warranty company may ask for.
  4. A healthy doubt about urgent mailers. Treat notices saying your warranty is about to expire as ads. The FTC warns about that act-now pitch for service contracts, and if you do have a contract, the renewal terms are already in it.

None of these tells you whether a plan pays off for your house, and the article walks through that math using your own systems, their ages and the contract's numbers.

See when a home warranty makes sense

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