Are Home Warranties worth it??

22 Replies

I just acquired a single family home built in 1950.
and wanted to rent out the house on a 1 year lease.
I was considering getting a "Home Warranty".
Are they worth it or not ?
Everything in the house works, but you know there's
always small toilets...etc....

BTW, i also know a good handy man who charges $25/ hour
to fix random stuff in the house.


I might get one for a rental if I was highly suspect of the HVAC. Also read the fine print so you understand coverages and deductibles.

I have them on all my properties. It really comes in handy when an AC breaks down and you just tell the tenant to call the home warranty company. I have also had numerous garbage disposals repaced, a dishwasher replaced, garage doors fixed, drains unclogged by the company. It may not save me much money but it's a huge time saver and I put in the lease that the tenant is responsible for the trade call fee after 30 days occupancy.

The convenience is worth it. I've used it for a/c, plumbing.
You don't have to waste time calling around, and the service fee is $75 each time.
Yearly fee is $4xx. You win some, you lose some. But they always have someone out by the next day, and that keeps tenants from getting pissed off.

Yes. They're usually $500/year/property.

They don't cover everything, but some home warranties (most? many?) at least cover HVACs, hot water heaters, and some big ticket items.

Not everything is covered. Be sure to read what is covered and what isn't. For example, my will cover a leaky drain, but not a leaky shower or a shower knob. Drywall is not covered, even if the leaky drain ruins the ceiling. Also, some repairs are covered only up to a certain amount. If the repair costs more than the limit or other things need to be repaired too (say, an electrical outlet near a hot water heater), the costs might not be fully covered. You also have to pay a deductible. Mine are around $75-100 per call. Broken toilet flange? HVAC not working? Hot water heater leak? $100 per call.

I like the convenience. Occasionally you'll get a dud of a repairman that doesn't show up promptly because you're a home warranty client, but I've had pretty good experiences with the repairman. Some repairman want to charge me what the home warranty will cover plus some (they find other relevant things that they want required before they'll fix whatever it is). Some home warranty companies will also write you a check for their allowed repair cost, then you can get the repair done yourself. That's useful if the home warranty repairman wanted to charge you for other relevant repairs along with what the home warranty company would cover.

I've had HVAC systems fixed several times with the home warranty. It's convenient, and maybe one day I'll score a new HVAC system out of the deal.

Great! Thanks for the replies. So far i have seen 2 companies that offer Home Warranties, American Home Shield & Old Republic.

Which one is better ?

I will give you my perspective and the other end of the home warranty. That of the hvac contractor. I've done work for 2 companies just to try them out and know many people who have worked for them. It seems to be pretty consistent from company to company, some better some worse. First of all, they are very hard to collect any money from. You pay the service call of $65 or whatever it is. Some of the warranty company's offer to reimburse anything above them, which is like pulling teeth from a toothless man, impossible. Others just don't pay the contractor anything aside from that $65, so they have to be creative to try to cover their overhead, cause $65 doesn't pay for anything on my end except gas in truck, a low paid person, therefore not very skilled driving it and insurance. Most people who do it, don't do it for very long. Usually anybody who has done it for any length of time is what I call a bottom feeder in the hvac world. You are getting the worst and biggest rip off artists, doing it honestly for any length of time, you go broke. Just my 2 cents for what its worth.

Surprised their are so many positive reviews here, speaking for myself , other contractors I know and as an agent, a few homeowners who found them completely useless, the fine print killed anything that needed replacement and contractors as Brian referenced trying to make up the difference made everything else overpriced and worthless as well.

I have used Old Republic for many years. With very few exceptions the contractors sent out have been professional. Other posters are correct in that not everything is covered. For example I had a hot water heater replaced last year. They payed for the heater and labor to install but they charged me for the city permit to install (?$50). Also they wouldn't pay for removal and disposal of the old heater but I just had my handyman do it (?$25). The policy costs me about $400/year, I figure I at least broke even that year plus I didn't have to call around for quotes.

I use Fidelity. $360/yr includes AC coverage. $60 house calls.

No. Save your money and put it towards repairs that the home warranty company will weasel out of anyway.

I wouldn't recommend it. I had it when I purchased a duplex and the company wanted to weasel out of the claims I made. Then when furnace went out in the winter time, they couldn't even get a contractor out there.

@Dawn A. - what company?



This was HSA Home Warranty.

@Dawn A. - thanks. I have a duplex with American Home Shield. They upped the price to $67/mo but that does include items like permit fees, opening walls, and returning them to unfinished condition. Haven't had to use them yet, and debating renewing it or switching companies. Their previous plan was $40/mo for a duplex, and didn't include the above items.

- Tom

Originally posted by Nick Frank:
Great! Thanks for the replies. So far i have seen 2 companies that offer Home Warranties, American Home Shield & Old Republic.

Which one is better ?

AHS sucks!

I think any home warranty customer will say it sucks in some way.
You really have to assess your property history and bet if anything is likely to break. In my rental, tenants manage to break things all the time.

Bottom line, usually home warranties are convenient. If you really want to win, price the warranty into your rent. It's $40 per month, and if you raise your rent by that amount, essentially the tenant is paying for the warranty.
If anything needs repair, with the $75 service fee, you still win.

Without warranty, Plumbing and hvac repairs usually cost $160-$$arm and $$leg.
In my own 20-year-old home, I do not have Home warranty, and recently had to pay out of pocket for a copper water supply line leak, where they had to cut open the wall. $800.
AHS would have covered it for $75.
However, in this case, with no warranty, I still win, because this $800 incident was the only one in the last 10 years. I saved $4000 in warranty premiums. But who knows, it could have been worse.

I've had good and bad experiences with american home shield in my 50-year-old rental, but mostly good/acceptable.
Recently, I got the a/c fan motor replaced. $75. Tub spout leak $75 (yeah, it sounds simple, but I thought it would be more serious, and I couldn't diagnose the problem myself).
Many years ago, I got a new oven and water heater from them.

The bad experiences- which I had to fight- and won 50/50.
One was a clogged kitchen sink. One stupid plumber wouldn't remove the p-trap to unclog it, being afraid it would break. I told AHS to send another guy out, and didn't have to pay the service fee again. 2nd guy unclogged it.
Original 50 year old toilet wouldn't flush well. Wouldn't cover toilet replacement because the plumber said it was from limescale deposits. Warranty fine print says "chemical deposits" void coverage. Since I'm handy, I bought a toilet from home depot and installed it myself.

that really sucks that they try to stiff you, but can't you be persistent? It's like getting rebates, you gotta be persistent. maybe threaten to sue

Yah when you add all this up, you get a 5/10. That is exactly my experience having AHS on three houses for about 18 months in each case. Mostly I was just paying the monthlies. Then the occasional $75 copay. Mixed feelings about the service. Some weaseling, but I also got a new $500 fridge. So it all kind of came out in the wash. I wish there was a really great, reputable, wonderful warranty company out there that would give you a new AC compressor for a $50 copay if you pay then $250 a year :p Barring that, it ends up about even over the course of the decade I guess. But as one person said, by definition, it's about odds. The odds are that your $500 a year and $75 copays and their exclusions will add up to a net win for them more years than not.

I purchased Fidelity Home Warranty for my 100 yo rental and this year it replaced a pipe and a wall furnace. Service fee was only 55 for eAch incident and 75 for some cosmetic work that needed to be done when the heater was replaced. I had a good experience each time I called them. I would purchase for older homes that run the risk of needing major work, but probably not for a newer home.

I have used Old Republic and American Home Shield and have never had any issues with either trying get out paying for a repair that was covered (warning: read your fine print in the plan). The medium plans are ~$400 - $500 per year with ~$60 - $75 service calls. I have had some plumbing repairs and AC repairs where the warranty came in handy but the companies do have caps on what they will pay for a particular repair. As my plans expire this year, I don't think I am going to re-up. As I acquire more properties, it does not make sense to pay $500 per property for warranties. For instance, at four properties, that is $2000 per year in warranties not to mention the service calls. I can put that money aside for actual repairs. If I have a year where repairs are minimal, I save the money as repair reserves.

In a years time, I will put up my current residence for rental and debating if I need to carry a home warranty or not since the house is 8 yrs old and appliances are in good condition while ref is totally brand new.  Reading from the replies over here helps but at the same time, made it harder to come up with a decision because there's pros/cons to either having the warranty or not.  I for one is not handy whatsoever, I don't want the hassle of managing it from out of town and I don't have the reserve fund setup yet for any fix ups so that adds to my own debate.

I read below article and wanted to share since I am also one who would rather save the warranty premium + per incident fee for a reserve repair fund.

Put the money you'd pay for the warranty into a reserve fund; you will almost always come out ahead. Insurance and repair companies aren't charities; they exist to make money. If warranties saved the majority of people money over the long term these companies would go out of business. As long as you keep a healthy reserve fund, I think warranties are stupid.

Interesting to read these mixed reviews.  

I have warranties on 8 doors, and so far I like it.  It makes it easy to just submit a claim online, and have the tradesman call the tenant to schedule.

I have it written into the lease that tenants pay the first $60 of repairs, which is the call fee.

I pay ~ $360/unit/year.  I've had numerous disposals replaced, leaky toilets fixed, plumbing leaks fixed, and broken fridge/dishwasher/stoves fixed.  I got rejected one time bc an outdoor hose bib was leaking and they wouldn't fix that. 

I know at some point I'm going to have to put together a real crew of people to fix things and will need to get away from using home warranties to maintain, but in the meantime I'm enjoying (and paying for) the convenience. 

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