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    Home Warranty Reality Check

    $600/year — does the math work?

    The honest take

    Home warranties (American Home Shield, Choice, Cinch, etc.) cover repairs to appliances and home systems. Most consumer studies show they pay out less than premiums. Better Business Bureau ratings tend to be poor. Self-insurance (savings account) usually beats them.

    How they work

    • Pay $40-70/month premium ($480-840/year).
    • When something breaks, pay $75-125 service call fee.
    • Warranty company sends THEIR contractor — you don't pick.
    • Contractor diagnoses. May or may not cover it.
    • If approved → they pay for repair (with limits).

    Common denial reasons

    • "Pre-existing condition" — broken when you signed up.
    • "Improper maintenance" — you didn't change filters etc.
    • "Code violation" — needs a permit/code upgrade.
    • "Not covered" item — refrigerant, ductwork, code upgrades, modifications.
    • Capped payouts — $1,500 cap on AC compressors, etc.

    When a warranty makes sense

    • You bought an older home (10+ years) and don't know condition of HVAC.
    • Your appliances are 8-15 years old — multiple breakdowns expected.
    • You don't want to vet contractors yourself.
    • You have $0 emergency savings — predictable monthly cost helps.
    • It came free with home purchase — use the first year.

    When to skip

    • Newer home (under 10 years) with newer appliances.
    • You have $5,000+ emergency savings — self-insure.
    • You have a trusted local handyman or HVAC contractor.
    • You've had bad past experience with denied claims.

    The math

    $600/year × 10 years = $6,000. New AC = $5,000-8,000. New furnace = $4,000-6,000. New fridge = $1,500. Statistically you'd come out about even — IF claims aren't denied. Most aren't. Better: open a high-yield savings account, deposit the same $50/month. After 10 years you have $7,000+ with interest. You pick the contractor.