Quick answer
A home warranty is a service contract that pays to repair or replace covered home systems and appliances when they break from normal wear and tear. You pay a monthly or yearly fee plus a service fee each time a technician comes out. It can help retirees on a fixed income budget for surprise repairs, especially in a home with older appliances, but it does not replace homeowners insurance and it excludes many problems.
Home warranty basics
| Item | What to know |
|---|---|
| Monthly cost | American Home Shield lists plans from about $30 to $80 a month (with a $125 service fee) |
| Service fee | Paid each visit; often $100 to $125 |
| Waiting period | Often 30 days before you can file a claim |
| Coverage caps | Limits per appliance or system, such as $2,000 or $4,000 |
| Common exclusions | Pre-existing problems, poor maintenance, code upgrades |
Last reviewed October 27, 2026 by Greg Wilson. Sources: Insurify, American Home Shield review, company websites. Partner links may earn SeniorAffair a commission.
When a water heater or furnace fails, the bill can be several thousand dollars. On a fixed retirement income, that kind of surprise hurts. A home warranty spreads that risk into a predictable monthly payment, but it only makes sense if you understand what it covers.
Home warranty vs. homeowners insurance
They cover different things:
- Homeowners insurance pays for sudden damage from events like fire, storms, theft and burst pipes. Your mortgage lender usually requires it.
- A home warranty pays to repair or replace systems and appliances that wear out with normal use, such as an air conditioner, water heater, dishwasher or refrigerator.
Many homeowners have both. A home warranty is optional.
What a home warranty usually covers
Plans are usually sold in tiers:
- Systems plans cover heating, air conditioning, electrical, plumbing and water heaters.
- Appliance plans cover the refrigerator, oven, range, dishwasher, built-in microwave, washer and dryer.
- Combination plans cover both, sometimes with extras like limited roof leak repairs.
For example, American Home Shield sells ShieldSilver (systems only), ShieldGold (systems and appliances) and ShieldPlatinum (adds limited roof leak repair and more generous appliance limits).
Compare home warranty plans
American Home Shield offers systems, appliance and combination plans.
Partner link: SeniorAffair may earn a commission if you buy, at no extra cost to you.
What it usually does not cover
Read the contract carefully. Common exclusions include:
- Problems that existed before coverage started.
- Damage from poor maintenance, such as a furnace that was never serviced.
- Code upgrades, permits and haul-away, unless the plan includes them.
- Costs above the plan’s coverage cap for an appliance or system.
What it costs
Expect a monthly premium plus a service fee each time a technician visits. American Home Shield, for example, lists monthly prices from about $30 to $80 depending on the plan, with a choice of a $100 or $125 service fee; picking the higher fee lowers the monthly price. Most plans have a 30-day waiting period before you can file your first claim.
Is a home warranty worth it for seniors?
It can be worth it if:
- Your major appliances and systems are 10 or more years old.
- A sudden repair bill would strain your budget.
- You do not want to find and vet repair contractors yourself.
It may not be worth it if:
- Your systems and appliances are new and still under the manufacturer’s warranty.
- You have an emergency fund that can absorb a large repair.
- You prefer to choose your own repair company.
An alternative is to put what you would pay for a warranty into a dedicated savings account for home repairs.
How to choose a home warranty company
- Compare what each tier covers, not just the price.
- Check coverage caps for the items you care about most.
- Ask how technicians are assigned and how quickly they come out.
- Read customer complaints with your state attorney general or the Better Business Bureau.
- Ask what happens if an item cannot be repaired: replacement or a cash payout.
Frequently asked questions
Can I buy a home warranty for an older home?
Yes. Most companies cover older homes, but they will not pay for problems that existed before your coverage began.
Can I cancel a home warranty?
Most plans can be canceled, though terms vary by company and state. You may get a prorated refund minus any claims paid.
Do I have to use the warranty company’s technician?
Usually, yes. Most companies send a contractor from their network. Some plans let you choose your own contractor and reimburse you.
Part of our Retirement Money Guide. Retirement accounts, Social Security, banking, home equity and debt, all in one place. See the full guide →
