Is a Home Warranty Required? A Buyer’s Guide to Coverage & Costs

Quick Answer: No, a home warranty isn’t required—but it can help cover repair costs for appliances and systems due to normal wear and tear. It’s an optional plan some homebuyers choose for peace of mind

If you’ve heard the term ‘home warranty’ during the home buying process, you might be wondering: is a home warranty required when buying a house? The short answer is no—home warranties are optional, but they can offer peace of mind by covering repairs for appliances and major systems due to normal wear and tear. Though paid upfront, it can save you money in the long run.

Whether you’re buying a home in Tampa, FL, Boise, ID, or Providence, RI, this Redfin guide will explain when a home warranty might be worth it and help you decide if it’s the right choice for your needs.

What is home warranty?

A home warranty, or home protection plan, is a service contract that covers major home systems and appliances when they break down from normal wear and tear. Unlike homeowners insurance, which covers sudden damage from accidents or disasters, a home warranty helps reduce out-of-pocket repair costs—for example, covering most of the expense if your furnace fails in winter.

>> Read: Home Warranty vs. Home Inspection: Do You Really Need Both?

Is a home warranty required?

A home warranty isn’t legally required when buying a house. Unlike homeowners insurance, which lenders usually mandate, a warranty is optional coverage for repairs or replacements of major systems and appliances due to wear and tear. Some sellers may include one as an incentive, but buyers can also purchase it for peace of mind—especially with older homes.

What is covered by home warranty? What isn’t?

There are clear distinctions between what a home warranty will cover and what it won’t. Understanding these details is important as you consider whether a warranty makes sense for your home.

What’s typically covered

• HVAC system: Central heating units, air conditioners, and ductwork
• Plumbing system: Pipes, toilets, water heaters, and interior plumbing lines
• Electrical system: Wiring, electrical panels, and related components
• Major appliances: Refrigerator, oven, built-in microwave, dishwasher, garbage disposal, washer, and dryer
• Leaky roof: Some policies offer limited coverage for roof leaks.
• Septic system or well pump: Select plans may also include repairs to septic tanks or well pumps.

What’s commonly excluded

• Pre-existing conditions: Problems that existed before your coverage began won’t be covered.
• Improper installation or maintenance: Warranties typically exclude items that fail due to improper installation or maintenance.
• Cosmetic issues: Dents, scratches, and other superficial damage are not included.
• Items under manufacturer’s warranty:A home warranty won’t duplicate manufacturer protection.
• Non-major appliances: Standard plans often exclude smaller appliances like countertop microwaves, standalone freezers, or wine coolers.

What are the pros and cons of a home warranty?

A home warranty can be a helpful safety net, but it also comes with some important trade-offs to consider.

Pros:

• Budget-friendly protection for unexpected repairs, typically costing a few hundred dollars annually compared to potentially costly out-of-pocket repairs.
• One call to coordinate service, simplifying the process and saving time hunting for trusted contractors.
• Peace of mind knowing you’re covered if something breaks, helping avoid large surprise expenses.
• Transferable coverage: Many home warranties can be transferred to a new owner if you sell your home, potentially making your property more attractive to buyers.

Cons:

• Service fees (usually $50–$125) required for each claim, which can add up if multiple repairs are needed.
• Coverage limitations and exclusions may leave some repairs uncovered, meaning you could still face unexpected costs.
• Possible delays or disputes when filing claims that might require persistence to resolve, potentially prolonging out-of-pocket expenses.

When is a home warranty worth it?

For older homes, a warranty can help cover costly repairs or replacements, like a furnace that might cost$3,800 to $10,000, while annual coverage typically ranges from $300 and $600 plus service fees, potentially saving thousands on unexpected breakdowns.

You might consider a home warranty if:

• You’re a first-time homeowner seeking predictable costs and can opt for a home warranty. Instead of large repair bills, you pay set premiums and a service fee when issues arise.
• You’re a seller looking to make your listing more appealing and give buyers extra confidence that any surprises after move-in will be covered.
• You own rental property and want to simplify repairs while keeping costs more predictable over time.

>> Read: Home Maintenance Checklist for First Time Homebuyers

When do you skip a home warranty?

For new homes, a builder warranty often covers major systems and structure, making a separate home warranty unnecessary. The same is true if appliances or systems are still under manufacturer warranties. Some homeowners also skip coverage and instead set aside savings for repairs and maintenance.

Keep in mind:

• Older systems without maintenance records may lead to denied claims if you can’t prove regular upkeep.
• Preventative home maintenance and good documentation can sometimes offer the same peace of mind without the extra expense.

How do you know if a home warranty is right for you?

Examine the age and condition of your home’s systems and appliances

Older or heavily used items are more likely to need repairs, making coverage more valuable. If you’re concerned about something major, like an HVAC system, research the typical cost of repairs or replacement and compare that to a year of warranty coverage, plus service fees.

Consider your financial cushion

If an unexpected repair bill of a few thousand dollars would strain your budget, spreading costs out with predictable premiums can offer peace of mind. Even if you could pay out of pocket, having a backup plan sometimes makes homeownership feel less stressful.

Think about how much time you want to spend coordinating repairs yourself

If you prefer to avoid searching for and vetting contractors, a home warranty’s one-call service can be a major convenience.

Evaluate the home warranty plan

Before you decide to buy a home warranty, review the following:

• Review contract details carefully: Coverage varies by plan, so understand exactly what’s included, what’s excluded, and any payout limits. Most warranties have caps per item or term, and they typically don’t cover pre-existing issues.
• Check costs and fees: In addition to the annual premium, expect a service call fee each time you request a repair.
• Look into waiting periods: Many plans don’t start right away and have a 30-day waiting period after purchase. Coordinate with your Redfin Real Estate Agent to make sure the warranty takes effect when you close on the home.
• Research the company’s reputation: Read reviews and ratings to see how providers handle claims and customer service.
• Run a few scenarios: Estimate whether you’d save money compared to paying for repairs out of pocket, especially if your systems and appliances are newer.
• Consider your comfort level: Think about whether you prefer predictable costs or don’t mind covering unexpected repairs yourself.
• Review renewal and cancellation terms: Most contracts renew automatically each year, so check how to cancel or adjust coverage if your needs change.

What are alternatives to home warranty?

If a home warranty doesn’t feel like the right fit, consider these other ways to prepare for unexpected repairs:

• Set up an emergency repair savings fund: Regularly saving money can create a financial cushion for repairs as they arise.
• Rely on manufacturer warranties: Keep track of warranties that come with new appliances or systems to take advantage of covered repairs.
• Buy appliance-specific extended warranties: Purchase additional coverage for key appliances that might need extra protection beyond the manufacturer’s warranty.
• Invest in preventative maintenance plans: Regular inspections and tune-ups, like HVAC servicing or plumbing check-ups, can help prevent costly breakdowns.

Making the call: do you need a home warranty?

So, is a home warranty required? No—but it can be a smart way to protect yourself from expensive repairs and enjoy more peace of mind. By considering your budget, the age of your systems, and how you prefer to handle maintenance, you can decide whether a home warranty or another approach is the right fit for you.

FAQs on home warranty

1. Do lenders require a home warranty?

No, lenders do not require a home warranty. Unlike homeowners insurance, which is typically required by your mortgage lender, a home warranty is completely optional. It is a service contract you can choose to purchase for additional protection against unexpected repair costs.

2. What is the average cost of a home warranty?

The average cost of a home warranty typically ranges from $300 to $600 per year, depending on the coverage level, the size of the home, and the provider. You may also pay service fees of around $75 to $125 each time you request a repair or replacement.

3. Can I cancel my home warranty if I change my mind?

Yes, most companies let you cancel within the first 30 days for a full refund (minus any claims paid). After that, there may be a cancellation fee.

4. Are there coverage limits I should know about for a home warranty?

Most plans have dollar limits per item or per year—like $2,000 per appliance or $10,000 in total annual claims. Always read the fine print.

5. Does a home warranty cover code upgrades or permits?

Typically no. Standard plans don’t pay to bring systems up to current code or cover permit fees, though some companies offer optional add-ons.

6. What is the difference between a home warranty and home insurance?

A home insurance policy covers damage from unexpected events like fire, storms, or theft, protecting your home’s structure and belongings. A home warranty, on the other hand, is a service contract that pays to repair or replace major systems and appliances that break down due to normal wear and tear.