The cleanest way to get a home warranty when buying a house is to have your agent write it into the purchase agreement, pick a plan that matches the home’s age and systems, and let the settlement agent fold the premium into closing so coverage starts on the day you take ownership. Warranties purchased this way skip the 30-day waiting period that applies to policies bought independently, and standard plans generally run about $350 to $900 per year.
Start With an Inventory of the Home
Before you shop plans, walk the property and list every system and appliance you want covered. The big-ticket items are the HVAC system, water heater, electrical panel, plumbing, and major kitchen appliances like the refrigerator, oven, and dishwasher. Check the age of each one. An HVAC unit that’s 12 years old on a system with a 15-year expected lifespan is a much stronger argument for coverage than one installed two years ago.
Note anything unusual about the property. Homes with septic systems, well pumps, pools, or exterior plumbing lines need add-on coverage that standard plans exclude. Those extras can add $100 to $300 per year to the base price, but skipping them leaves you exposed to some of the most expensive repairs a homeowner can face. Knowing exactly what you need before you start shopping keeps you from buying a plan that looks cheap on paper but leaves gaps where they matter most.
Compare Plans, Premiums, and Service Fees
Home warranty pricing has two components: the annual premium and the service call fee you pay each time a technician visits. Annual premiums for a standard plan that bundles both systems and appliances generally fall between $350 and $900, depending on the provider and coverage level. Basic plans covering only appliances or only systems sit at the lower end, while comprehensive plans with higher payout limits can run $1,200 or more.
Service call fees across the industry range from about $65 to $150 per visit, with most providers clustering around $75 to $125. There’s an inverse relationship here that catches some buyers off guard: choosing a lower service fee usually means a higher monthly premium. If you expect to file multiple claims in the first year on an older home, a higher premium with a lower per-visit fee may save money overall. On a newer home where you’re buying the warranty mostly as insurance against one catastrophic failure, a lower premium with a higher service fee often makes more sense.
Payout Caps
Every home warranty contract sets limits on what the company will pay per repair or per year. Per-item caps commonly range from $1,000 to $5,000 for individual appliances, HVAC systems, and water heaters. Some providers also impose an aggregate annual limit that caps total payouts across all claims. A few advertise “no cap” on certain items, but read the contract language carefully because those plans often cap the aggregate instead. If replacing your central air system would cost $6,000 and the plan caps HVAC payouts at $2,000, you’re covering the difference out of pocket.
Check the Provider’s Licensing
Most states require home warranty companies to obtain licenses, typically through the state insurance department, though the specific oversight agency varies. Some states regulate these contracts under dedicated service-contract statutes, while others fold them into insurance law. A handful of states have minimal regulation or none at all. Before choosing a provider, confirm the company is licensed in your state by searching the relevant department’s website. A company that isn’t licensed where you live is a red flag you shouldn’t ignore, no matter how good the pricing looks.
Read the Exclusions Before You Sign
Understanding what a warranty won’t cover prevents the most common source of frustration with these contracts: the denied claim. Three categories trip up new buyers more than any others.
Pre-Existing Conditions
If a system or appliance was already malfunctioning before your coverage started, the warranty company will deny the claim. The definition is broad: any condition that a professional technician could have detected through a visual inspection or simple mechanical test counts as pre-existing, even if you personally had no idea the problem existed. This is why the home inspection matters so much. If the inspector flags a furnace issue in their report and you close anyway without repairing it, that furnace failure is almost certainly excluded from day one.
Maintenance Requirements
Warranty contracts require that covered systems and appliances were properly maintained before the breakdown. If an HVAC claim gets investigated and the technician finds no evidence filters were changed or the system was serviced, the company can deny coverage. On a home you’re just buying, ask the seller for any maintenance records they can hand over at closing, and start keeping your own from day one.
Smart Home Features and Newer Technology
Standard home warranty plans cover mechanical and electrical components of traditional appliances and systems, not their smart features. If the compressor in your refrigerator fails, that’s covered. If the refrigerator’s built-in touchscreen or app connectivity stops working, it’s not. Standalone smart devices like video doorbells, smart plugs, and voice assistants fall outside coverage entirely. Solar panel systems are another common gap. If the home you’re buying includes newer technology, confirm the specific exclusion language before signing.
A Boundary Worth Knowing
A home warranty is not homeowners insurance, and buying one does not reduce your need for the other. Homeowners insurance protects against sudden, unexpected events like fire, theft, storm damage, and liability, and your mortgage lender requires it. A home warranty covers the predictable: systems and appliances wearing out over time. No lender requires it. The two products complement each other but don’t overlap.
Negotiate the Warranty Into the Purchase Agreement
The best time to secure a home warranty is during contract negotiations. Have your real estate agent write a provision into the purchase agreement requesting that the seller provide a warranty. In many markets this is a routine concession, and sellers often agree because the cost is small compared to the overall transaction. Some agents include a warranty request in nearly every offer they submit.
The provision should specify a dollar amount the seller will contribute toward the premium. If the seller agrees, that amount shows up as a credit to you at closing. If the seller refuses, you can still purchase the warranty yourself by including it as a buyer-paid closing cost in the contract. Either way, getting the warranty written into the purchase agreement locks in coverage from closing day and ensures the cost is handled through the settlement process rather than as a separate transaction you might forget about in the chaos of moving.
RESPA Protections on Warranty Transactions
Federal law puts guardrails around how home warranty costs flow through a real estate closing. Under RESPA, no one involved in the transaction can receive a kickback or referral fee for steering you toward a particular warranty company. Your agent can recommend providers, but they cannot accept payment from a warranty company simply for sending business their way. Any compensation an agent receives from a warranty company must be for actual services performed and must be disclosed to you in advance.1Office of the Law Revision Counsel. 12 USC 2607 – Prohibition Against Kickbacks and Unearned Fees A payment by a warranty company for marketing directed at specific buyers or sellers is an illegal kickback under this statute.2Federal Register. Real Estate Settlement Procedures Act (RESPA) Home Warranty Companies Payments to Real Estate Brokers and Agents
Complete the Application
Once you’ve chosen a provider, you fill out an application that initiates the policy. The form asks for the property address, the anticipated closing date, and the specific plan you’re selecting. Most providers offer these forms through an online portal, though some work through real estate transaction management platforms your agent or title company may already use.
The application includes sections for add-on coverage. If you identified items like a septic system, well pump, pool, or exterior plumbing during your earlier inventory, this is where you check those boxes. Each add-on increases your premium, so match these selections to your actual property rather than checking everything to be safe. You’re paying for each one every month whether you use it or not.
Fill out the form accurately, especially the closing date. The settlement agent needs correct information to process the payment and ensure your coverage starts on the right day. Errors here can create a gap between when you take ownership and when your warranty activates.
Finalize the Warranty at Closing
The completed warranty paperwork goes to your settlement agent or escrow officer, who incorporates the premium into your closing costs. For most residential mortgage transactions, the warranty payment appears as a line item on the Closing Disclosure form. The older HUD-1 Settlement Statement is still used in some limited situations like reverse mortgages and certain cash transactions, but if you’re taking out a standard mortgage, you’ll see it on the Closing Disclosure.
If the seller is paying, the warranty cost comes out of their net proceeds at closing. If you’re paying, it adds to the total amount you need to bring to the closing table. Once the transaction funds and records, the settlement agent sends payment to the warranty company on your behalf.
When Coverage Starts
For warranties purchased as part of a real estate closing, coverage typically begins on the day of closing with no waiting period. That’s the main reason to handle it now rather than later. Companies selling directly to existing homeowners almost universally impose a 30-day waiting period before coverage kicks in, which means 30 days of exposure if you wait until after you’ve moved in. Purchasing through the transaction eliminates that gap.
You’ll receive your final policy documents and account information by email or mail shortly after closing. Read the full contract when it arrives. The summary you reviewed while shopping may not capture every exclusion or cap that appears in the actual service agreement.