Last reviewed: 2 October 2026
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United StatesWhat are the alternatives to buying a home warranty?
A home warranty is one way to plan for repair costs, not the only one. This guide explains the options two government sources describe and how they differ. It does not tell you which to choose, because that depends on your home, your budget and the contract in front of you.
The short answer
- What a home warranty is: the FTC calls home warranties "really service contracts" that "cost extra" and typically cover replacements and repairs for items like appliances or air conditioning systems.2
- Setting money aside: the FTC says "putting money aside in a savings account" is another way to plan for repairs and accidents, and that after evaluating the extended warranty or service contract coverage you "might find" it is a better option.1
- Coverage you may already have: the FTC says that after looking at the details, "you may find that a home warranty duplicates coverage you already have,"2 and that a service contract is "not a good value if it doesn't offer more coverage than the warranty that came with the product."1
- Homeowners insurance is a different product: California's Department of Insurance says a homeowners' policy covers damage from major events such as wildfires, and that home warranties "do not overlap or replace" it.3
The options these sources describe
The FTC's extended-warranty page is written about products generally; applying it to a home is our reading.
| Option | What the source says | What the source says to check |
|---|---|---|
| Buy a home warranty (the baseline) | A home warranty is "really" a service contract; it typically covers replacements and repairs for things like appliances or air conditioning systems, lasts a set period, and costs extra.2 | Upfront cost and hidden costs such as deductibles or service fees; limits on reimbursement; whether accidental damage is covered; cancellation fees; claims process; company reputation.2 |
| Set money aside for repairs | The FTC says extended warranties and service contracts "aren't the only way to plan for future repairs or accidents" and that after evaluating the coverage you "might find that putting money aside in a savings account is a better option," using that money if repairs come up.1 | The FTC frames this as a conclusion you might reach after evaluating the contract's coverage. It does not give amounts or say how much to set aside.1 |
| Coverage that already comes with a product or a new home (the FTC mentions this only as a contrast) | The FTC says an extended warranty or service contract is "different from the warranties that may automatically come with a product," costs extra and "might cover different issues than a manufacturer's warranty."1 The FTC says home warranties, unlike "builder warranties for new homes, or warranties included with some products," cost extra.2 | Whether a contract you are offered adds coverage beyond the warranty that came with the product.1 |
| Not buying a contract (the FTC mentions this for products generally) | The FTC says an extended warranty or service contract "might not be worth the cost if a product isn't likely to need repairs," and suggests checking product review websites to see whether other people say a product often needs expensive repairs.1 | The FTC suggests looking at the product's repair record, the contract's cost and its limits before deciding. It does not say which choice is right for you.1 |
Homeowners insurance is a different product
California's Department of Insurance says the two are different products. It says home warranties "are not the same as a homeowners' insurance policy," that a homeowners' policy "covers damage to your personal property and dwelling caused by major events, including natural disasters like wildfires," and that "home warranties do not overlap or replace a homeowners' insurance policy."3 Our guide on home warranty vs. homeowners insurance goes further.
A home warranty may come with a home purchase
CDI says home warranties "are sometimes included when you buy a house, and are often paid for by the seller or agent," and that "you can choose your warranty company."3
Questions the FTC lists for any contract
For any extended warranty or service contract, the FTC suggests asking these:1
- Costs: the initial price and hidden costs such as deductibles or fees each time the product is serviced; shipping costs; a transfer fee; limits on reimbursement amounts.
- Reputation: who is actually offering it, how long the company has been in business, and what a search for the name plus "review" or "complaint" shows; and whether your state consumer protection office has complaints against the company.
- Length of coverage: use the contract's length and cost to work out its yearly or monthly cost.
- Coverage: what is limited or excluded, for example accidental damage, or denial for not following routine-maintenance instructions. The FTC says "if it isn't listed in the contract, assume that it's not covered."
- Claims process: how to make a claim, who handles repairs, and whether you must return the item to the store.
How this connects to our standard and Register
Our standard covers how we check home warranty providers; it is not a ranking of options. The Register shows the results of those checks for providers as a category and does not tell you whether to buy a home warranty at all. For a longer look at comparing contract terms, see how to compare a home warranty contract.
How to verify this yourself
- Read the FTC's "Extended Warranties and Service Contracts" (reference 1) and "So what's the deal with home warranties?" (reference 2) yourself; the quotes above come from them.
- Read CDI's Home Protection Contracts page (reference 3) for the home warranty versus homeowners insurance distinction. It is a California page; your state may treat these products differently.
- Check your own homeowners policy and any existing manufacturer or builder warranties for what they actually cover. Neither source can tell you that.
What this page is not
This page explains options; it does not recommend one. It covers only what these three government pages describe, so it leaves out other arrangements they do not discuss. It is general information, not legal or financial advice. If problems arise, the FTC says to report them at ReportFraud.ftc.gov or to your state attorney general.1