Home warranties differ considerably from home insurance, although some people mistakenly use them interchangeably. Home insurance is intended to cover you from external disasters. For example, if there is a storm, fire or your home gets broken into. There will usually be an investigation (a police one if it concerns a burglary) and the insurance company will then pay out.

But what happens when your washing machine, which may have under a 10-year lifespan, breaks down? Or if your gas cooker packs in just before Christmas. Home warranty plans are there to cover you for these general wear and tear situations – although they are still prepared to replace the appliances entirely if necessary.

Homeowners are usually the ones who provide home insurance. Therefore, when renting, if there’s a fire or a break-in, usually the landlord has insurance that can cover this. What we forget though, is that most rentals are self-furnished. This means that many of the appliances will have to be bought by the tenant. And if they are furnished, then the landlord will often have a repairman that they do business with, or ask the tenant to repair it if it’s their fault.

Generally, those with old appliances that are prone to breaking will be more likely to save money in the long run with a home warranty plan. It is also worth noting that if only half of the appliances are owned by you as the landlord, and the other half is the tenant’s, then you only need home warranty plans covering your own items.

This is possible as many companies will offer bespoke packages where you can essentially hand pick items and pay a monthly premium for each individual one.

The potential for saving money is pretty big. If you have several appliances break down in a small time-frame, the cost of repair/replacement can be huge and utterly unpredictable. Most appliances are absolutely vital on a daily basis, such as air conditioning units during the summer. This means they need to be dealt with ASAP, as any landlord knows.

Renting out is a business where costs are expected to be high and unexpected (as well as the income too). Landlords often factor in high maintenance costs and emergency costs, when in fact it is simply easier to just have a monthly, fixed outgoing that will cover maintenance and cap losses. It makes it much easier to know your future yield and profit, rather than having to forecast speculative costs. Not only this, but most of the time home warranty premiums are tax deductible.

The cost of a home warranty plan can often be around $40 to $50 per month. They can be more but it will depend on how many appliances you provide. Regarding the bespoke packages, individual appliances can be as low as $4 each per month. Considering the average repair cost of a washer machine is nearly $200, and the replacement of most household appliances can range from $500 to $5000, it only takes one or two appliances to breakdown within a year to have saved money.

Review Home Warranties’ recommended companies can be a good place to start when seeing how flexible companies are, and also more general important information, such as their customer satisfaction scores.

It’s not just about saving money

Will one or two items break down per year? And how much exactly is each one worth?

Well, it may be that you only break-even in the long run, or even spend a few more dollars on the monthly premiums if you’re lucky enough for things to rarely go wrong.

This doesn’t mean that getting one was a mistake, though, and it certainly doesn’t mean that they don’t have value. The true value of a home warranty plan is peace of mind, good service to the tenants and a huge time-saver.

Peace of mind

Being a landlord can be one of the most stressful investments. Having problems with tenants, non-occupancy, a shrinking market. One of the biggest stresses however is having to answer to issues of the home and pay for things when they go wrong. Home warranties allow the landlord to replace or repair things within a controlled cost – most coverage for appliances goes up to around $1,500.


Having a home warranty coverage plan is a great way to keep tenants happy. This level of service as a homeowner is better than having a handyman that you rely on, as opposed to a company with many technicians. It can help attract tenants in the future too, especially if the benefits of home warranties are explained properly. This can mean a higher rate of occupancy and possibly even higher rental rates.


You can actually give your tenants the phone number of your home warranty company and have them deal directly with the company. It may be just a matter of a phone call and being in the home for when they arrive to fix the appliance. Most tenants are okay with this, and it can save a lot of time for a landlord, particularly if they have multiple properties. Many landlords do tend to live far away or even abroad from their properties. One reason many pay a lot for property managers is for when things go wrong. However, if you have a long-term tenant then a simple home warranty package could save you from paying extortionate property agent fees.


Lastly, the warranty may just save you money. If you’re in a situation where the home is fairly old and run-down, then instead of renovating, a home warranty company could pick up a lot of the pieces. Renovating may cost tens of thousands, which should be considered at some stage, but in the time being it may be more lucrative to let things go wrong before you start fixing them. Home warranty companies will replace whole units, and so there is less of an incentive to splash out on a whole new kitchen.

The biggest thing to be wary of is to make sure the tenant properly maintains the home. If it turns out that the tenant has neglected the appliances severely, then the claims may be denied. This can be a challenge to find out, but it could be the difference in whether a warranty plan is worth it or not.