Are Home Warranties Worth It in 2025? 6 Questions to Ask Yourself

If a tree falls on your roof or your house floods, you’re likely protected: Your homeowners insurance has you covered. But what if the air conditioner goes on the fritz in the middle of a heat wave, or the washing machine breaks during the spin cycle? Homeowner warranties can cover the price tag, but is a home warranty worth it? And what will it cost? 

Home warranties don’t replace homeowners insurance; they provide supplemental coverage. The optional coverage they provide is designed to cover home systems like plumbing and electrical systems, heating and cooling systems and home appliances such as the refrigerator, stove, washer and dryer, which are typically excluded from traditional homeowners insurance policies. They’re a supplement, helping you further protect yourself against breakdowns and repairs.  

Homeowner warranties are most often purchased during the home buying process — and they can even help to seal the deal. Sellers often offer warranties to make their listings more attractive and to give buyers peace of mind.  

But what if you’re a buyer who wants to protect against unexpected expenses, especially if your new home has older systems or appliances? Is it worth it? We’ve gathered six questions to help you decide if a home warranty is worth it for you. 

1. Do I Need a Home Warranty? 

On new construction, most builders offer warranties that also cover new appliances. You may also get extended warranties on appliances and other in-home systems that are purchased with your credit card. In these cases, a separate warranty might be unnecessary. 

However, if you’re buying a house, it’s worth reviewing what’s covered and examining the policies that come along with your appliance purchases. Be sure to consider home warranty options for older homes, in which systems and appliances are more likely to break.  

2. What Does a Home Warranty Cover? 

Different companies offer different coverage options. But most home warranties cover major systems and appliances such as heating, cooling, plumbing and electrical systems, including electrical panels, wiring, furnaces and air conditioning units. Claims can be denied if problems are considered pre-existing, caused by incorrect installation or the result of poor maintenance. 

Understanding your warranty and coverage limits can help avoid surprise claim rejections. A home warranty may be worth it if you have a fair understanding of your home’s appliances and their conditions and feel confident your warranty will cover repairs. 

3. How Much Does a Home Warranty Cost in 2025? 

You’ll know the annual premium of your home warranty when you take it out, which often lands between $600 and $900 a year, according to NerdWallet. But in addition to the annual premiums, most warranties also have service fees, which can range from $65 to $150 per claim. 

Covering extras like a swimming pool or hot tub could require paying additional fees to upgrade a traditional home warranty. Be sure to read the fine print and know that you may end up paying more if there are additional fees. 

4. Who Are the Best Home Warranty Providers?   

Countless companies sell home warranties. Before choosing one, check the Better Business Bureau, the National Association of Insurance Commissioners and National Association of Attorneys General to see if other consumers have filed complaints against the company from which you’re considering purchasing a policy. You don’t want to be working with an unscrupulous home warranty company while dealing with a major home repair. When purchasing a home, your licensed Realtor can help provide you with suggestions for home warranty providers.  

5. What’s in the Fine Print of a Home Warranty Contract? 

Home warranty companies often set out precise terms and conditions for repairs. In the fine print of your contract, additional home warranty costs may lurk. Carefully read the service terms to understand what happens when you file a claim. You may have to use their contractors or settle for outdated appliances being repaired or replaced, even if it’s not your ideal outcome.  

In addition to getting information about the cost and coverage, review everything in the contract to learn how the coverage is put into action and decide if it’s right for you. 

6. Are There Better or Cheaper Alternatives to Home Warranties? 

Appliance insurance like Farm Bureau’s Residential Equipment Breakdown (REB) insurance offers a cheaper alternative to home repairs, often a few dollars a month — compared to $600 or more annually for traditional warranties. REB’s special coverage includes televisions, computers, stereos, air conditioners, furnaces, water heaters, appliances and other electrical home systems — just about anything that you can plug in. 

While buying a home warranty could protect you against unexpected and costly home repairs, it’s important to understand the finer points of these warranties before making a purchase. Make the choice that’s right for you and your home. 

Get Your Questions Answered 

Connect with Farm Bureau to learn more about homeowners insurance, adding residential equipment breakdown and what exactly it covers.