What Are Home Warranty Upfront Charges?

Wondering what are Home Warranty Upfront charges? We got you!

Buying a home is probably going to be the most expensive purchase you will ever make. And if something goes wrong with one of your home’s systems or appliances, it can be a major headache. That’s where a home warranty comes in.

A home warranty is a contract that covers the repair or replacement of many of your home’s most important systems and appliances. But what are home warranty upfront charges, and why do they exist?

This article will fill you in with everything you need to know about home warranty upfront charges.


What is a Home Warranty?

A home warranty is a warranty covering the repair and replacement of home systems and appliances.

Warranties are typically offered by home builders or real estate companies as an incentive to purchase a new home, but you can also purchase them separately.

Home warranties vary in coverage, but most include major appliances such as refrigerators, ovens, dishwashers, and clothes washers and dryers.

Some also cover HVAC systems, pools, spas, and garage door openers.

Home warranties usually cover the cost of parts and labor for repairs but exclude preventive maintenance and normal wear and tear.

Home warranty service contracts are typically offered for one year, although some companies offer multi-year contracts.

Read: How Does Home Warranty Work?

Read: American Residential Warranty Review

What Are Upfront Charges?

What Are Upfront Charges

You may have to pay an upfront charge when purchasing a home warranty. Home warranty upfront charges are a one-time fee that covers the cost of your home warranty policy. 

The upfront charge varies depending on the company you purchase your policy from and the type of coverage you choose. Generally, the more comprehensive the warranty, the higher the upfront charge.

The average upfront charge for a home warranty policy is between $100 and $500.

Some companies also give you a discount if you pay for your policy in full at the time of purchase. However, most companies require that you make monthly payments for your policy.

The upfront charge is not refundable, so be sure to read the terms and conditions of your policy carefully. You will not receive a refund for the upfront charge if you cancel your policy.

Why Do Home Warranty Companies Charge Upfront Fees?

Home warranty companies charge upfront fees to cover the cost of your policy.

The upfront fee is used to pay for the administration of your policy and to cover the cost of any claims you may make during the term of your policy. 

In most cases, the upfront fee is a one-time charge. However, some companies may require that you pay an annual fee to renew your policy.

On Average How Much Does Home Warranties Cost a Month?

Different home warranty companies charge different amounts. On average, however, the most basic plan starts at $36.32 a month, while a more comprehensive plan can cost you $68.71 a month.

Here’s a breakdown of different plans and their monthly and annual price.

Type of planAverage Monthly CostAverage Yearly Cost
Systems protection plan$30 to $45$360 to $540
Appliance protection plan$30 to $45$360 to $540
Comprehensive or combo plan$49 to $70$546 to $1,425

What Does a Home Warranty Cover?

What Does a Home Warranty Cover

Typically a home warranty would cover the following list of items:


This is the most common type of coverage that home warranty companies offer. This includes:

  • Refrigerators
  • Dishwashers
  • Stoves
  • Washing machines
  • Dryers
  • Ovens
  • Trash compactors, etc.


Another major thing that home warranties cover is systems within the home. This includes:

  • Plumbing systems
  • Electrical systems
  • HVAC systems
  • Septic systems
  • Fire, Alarm
  • Roofing, etc.

What Are the Benefits of Home Warranties?

  • Peace of mind: Home warranties offer peace of mind by protecting you from the high cost of repairing or replacing your home’s systems and appliances.
  • Saving money: In most cases, the monthly premium for a home warranty policy is much less than the cost of replacing or repairing an appliance. For example, usually the cost to repair a refrigerator is $200, while the average cost to replace a refrigerator is $1,500. The average monthly premium for a home warranty policy covering refrigerators is $25. So, if you had to replace your refrigerator, you would save $1,475 by having a home warranty policy.
  • Customizable: Many home warranty companies offer customizable plans. So you can choose the kind of coverage you want, and you can add add-ons to your existing plan. And even choose to pay monthly or yearly.
  • In-house repairman: Most home warranty companies offer their own service repairmen, so you do not have to worry about finding a repairman in your area.

Read: How Much Does A Home Warranty Cost Per Year?

What Are the Drawbacks of Home Warranties?

Drawbacks of Home Warranties

Home warranties are not flawless, and they come with their own disadvantages that you should be aware of:

  • Monthly bill & service fees: You are required to pay monthly fees, which could be anywhere between $50-$150 or even more. And not only this but you are also supposed to pay service fees or what is known as deductible each time a repairman gives you a visit. This could range between $50-$125.
  • Issues with claims: Not every claim that you make will get approved. A home warranty company may deny your claim in case of abnormal use of appliances, installation damage, breakdown of old appliances, etc.
  • Coverage caps: Every home warranty plan entails a coverage cap. And even if your home warranty company accepts your claim, you may still have to pay for any expenses that occur beyond your coverage cap.

Home Warranty vs Home Insurance

How Much Does Common Home Repairs Cost?

Having a home warranty can save you from unexpected expenses. Here’s a list of common home appliances and systems and the cost of their repair:

AppliancesAverage Cost of Repair
Dishwasher Repairs$150
Leaky Faucet$90 – $350
Electrical Issues$300
Roof Repairs$650
HVAC Issues$150 – $450
Dishwasher Repairs$150
Toilet Leaks$60 – $225
Septic Issues$1500

Home Warranty Companies Price Comparison

Home warranty companyAverage monthly premiumAverage combo planService fee
HomeServe$7.99 – $58.33$58.33$100
Select Home Warranty$57 – $63$63$75 or $100
America’s 1st Choice Home Club$32.08 – $55$55$75, $100 or $125
American Home Shield$29.99 – $69.99$60$75, $100 or $125
American Residential Warranty$34.99 – $124.99$60$55

Final Thoughts

Paying upfront for anything can be daunting, but home warranties are definitely worth the investment.

Home warranty upfront charges exist to cover the cost of your policy, and the benefits of having a home warranty far outweigh the cost.

Read: 3 Things To Consider During Home Inspection For Home Warranty


For how long does home warranties last?

The home warranty lasts for one-three years on average. After the expiry of the term, you can renew your home warranty plan.

When can I buy a home warranty?

You can buy a home warranty anytime you like, wether you are buying a new house, selling an old one, or living in the same house for years.

Is a home warranty plan tax deductible?

For residential properties, you do not get any tax deductions. It is tax deductible only if you are buying the home warranty for a rented property or if there is a home office in your house. 

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