Planning / Home warranty or Money set aside
Home warranty or money set aside?
Is a home warranty worth it? Only if the written exclusions leave real value after the fees, and this site found no regulator's figure for those fees. Money set aside is the simpler default, because you keep the choice of plumber.
Updated . Sources are listed at the foot of this page.
Find your line
- If you could not cover a surprise repair this yearHome warrantyA known yearly cost may be easier to plan around, if the exclusions are acceptable.
- If you can steadily save a repair fundMoney set asideThe money stays yours if nothing breaks, and you hire whoever you choose.
- If a warranty arrives with a California house saleHome warrantyCalifornia's insurance department says you can choose your warranty company, so compare before accepting one.
- If the contract's exclusions leave out what worries youMoney set asideForms are not standardized, so one contract's cover says nothing about another's.
- If you expect it to pay for water damageMoney set asideTexas and California both say warranties differ from homeowners insurance; check your policy instead.
How do the two compare on paper?
| Home warranty | Money set aside | |
|---|---|---|
| Cost known upfront | Fee set by contract; no regulator's figure found | Whatever you choose to save |
| If nothing breaks | The fee is spent | You keep the money |
| Who picks the plumber | Read the contract before signing | You do |
| California | Forms not standardized; you may choose the company | No rule involved |
| Florida | Licensing required; exclusions in boldface; rates unregulated | No rule involved |
| Texas | Different from home insurance, says the state | No rule involved |
Sources for this table: California Department of Insurance, Florida CFO, Texas Department of Insurance
Which details would move you from one to the other?
- You are in a state not named here. Warranty rules were checked only for California, Texas and Florida; check state rules.
- The seller pays for the first year. Then the question is only whether to renew.
- A big repair is plainly coming soon. Ask if existing conditions are excluded before relying on any contract.
- Your emergency fund already covers a typical repair, which weakens the case for a warranty.
What does each cost, and how do you compare them?
This site found no regulator's figure for a home warranty fee, either the yearly price or the service fee per claim, and no federal page on these contracts was read. So this page names no typical amount. Get both figures in writing from the company, along with any cap on what it will pay. Florida's Chief Financial Officer states that these rates are "not subject to regulation by the Office of Insurance Regulation," so in that state, shop on price yourself.
For the savings side, use repair costs as a target. Figures in a 2023 survey summary on Bob Vila (June 2023, national, HomeAdvisor data) show a typical plumbing job of $180 to $489, a standard water heater install of $850 to $1,650, and a main line leak repair of $350 to $1,550. Those may have risen since, and prices differ by area, so check them against a local quote.
Then compare: the yearly fee, plus per-claim fees for the calls you might make, against the fund it would take to absorb those same jobs. A warranty that declines the job you worry about costs its full fee and pays nothing, which is why exclusions come first. For planning larger replacements, replace now or wait helps.
Who answers when a claim is turned down?
Under a warranty, you deal with the warranty company, and the contract decides who comes out. In California, the Department of Insurance says that "Home warranty forms are not standardized" and to check exclusions. In Florida, companies must be licensed and "must disclose exclusions, restrictions, or limitations in boldface type." In Texas, the Department of Insurance says plainly that "A home warranty is different than home insurance." Rules in other states were not read, so your state may differ.
With savings, you answer for the hiring. You pick the firm and check its license on licensed or unlicensed. Regard all this as general information and not legal advice. If water is already on the floor, insurance is the separate question on insurer or plumber first.
Words to use
"What is the yearly price, and what is the fee for each service call?"
"Please send the full contract and point out every exclusion for plumbing."
"Is there a dollar cap on a covered plumbing repair?"
"Who picks the plumber, and can the choice be made by the homeowner?"
Also asked
- What does a home warranty service fee usually cost?
- No regulator's figure was found, so this site gives no typical amount. Treat any figure as the seller's. Ask for the fee per claim in writing and multiply by the calls you realistically expect, then add the yearly price to see the real annual cost.
- Is a home warranty the same as homeowners insurance?
- No. Regulators in California and Texas both say so directly. Check your insurance policy for water damage. Texas's guide names sudden, accidental water releases among typical covered items, but policies and states differ.
- Can a home seller's warranty be refused or changed?
- In California, the Department of Insurance says "you can choose your warranty company," even when a warranty comes with a sale. Other states were not checked. Ask your agent before closing, and compare it with a service plan or pay per visit.
Sources
- Home Protection Contracts, California Department of Insurance California forms, exclusions and choice of company
- Home Warranty Is Not Home Insurance, Texas Department of Insurance Texas warranty versus insurance
- Home Insurance Guide, Texas Department of Insurance Texas sudden water release coverage
- Home Warranty Overview, Florida CFO Florida licensing, boldface exclusions, unregulated rates
- How Much Does a Plumber Cost?, Bob Vila Repair ranges that help size a fund