homeowners, home warranties can be a worthwhile purchase, but for others, they amount to nothing more than a financial headache. Read warranty contracts carefully and consider whether the company’s payout limits will actually meet your needs if you need an unexpected major repair.

There is no hiding the fact that owning a home is expensive. That is why home warranty companies exist—to try to alleviate some of the hidden costs that come when an appliance or home system breaks down.

But not every home warranty is worth the monthly investment. That’s why

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What is a home warranty?

Home warranties are basically a contract between a homeowner and a warranty company that agrees to cover the costs of repairs and replacements to appliances and home systems. Buying a home warranty gets you discounted rates for the repair or replacement of those appliances or systems.

Warranties are usually purchased as one-year contracts, but extended warranties are available. They can be paid up front or as monthly installments, and companies will often have a basic package and then offer additional components to premium coverages for additional fees.

Home warranty vs. home insurance

Home warranties and home insurance are quite different.

Home insurance covers the structure of your home and its contents (not just appliances) from damage caused by specific perils named in the policy.

Home warranties help to pay the expenses incurred when an appliance or home system—say, the HVAC system—breaks down due to normal wear and tear.

For example, if your refrigerator was damaged in a house fire, that would fall under the scope of your home insurance. But if your fridge stops working because it's 15 years old and the compressor fails, you would have to pay that out of pocket unless you have a home warranty. If you have a warranty, you would call the warranty company to get a contractor to visit, assess the damage, and either repair or replace the fridge for you.

One major catch of home warranties is that there is a gray area between what constitutes normal wear and tear and what constitutes “owner negligence.” Damage from negligence is not covered by home warranties.

This can lead to frustrating situations where you believe you have been properly maintaining an appliance, but for whatever reason (the previous homeowner’s negligence, for example) the warranty company denies your claim.

Do you need a home warranty in Illinois?

Home warranties are not a requirement for homeowners in Illinois.

One reason to purchase a home warranty is that it provides a financial safety net if you don’t have an emergency fund set aside. For others, home warranties aren’t worth the money, though, and you would be better off setting aside the equivalent monthly payment in an interest accruing savings account.

How to choose an Illinois home warranty

If you decide that a home warranty is right for you, start by comparing plans from a few companies. Be sure to read their contracts carefully to make sure the plan meets your needs and that there aren’t any fine-print terms or conditions.

Also look at customer ratings and reviews. The company that offers the best service might not be the same as the company with the best rates.

A few things to keep in mind:

Home warranty companies charge service fees each time they have to send a contractor to your home. If a claim requires multiple visits, you could have to pay that fee each visit.

Warranty contracts still include a deductible, like an insurance claim. The average deductible in Illinois is around $42.

Home warranties have coverage limits. These limits range from $500 to $5,000 on average, but keep in mind that some home repairs cost more than that limit and you might have to pay the remainder out of pocket.

Check out the table below for a summary of five of the best home warranty companies in Illinois.

Company	Monthly payment	Annual premium	Service fee	States not covered	BBB rating	Limits	What it’s best for
Choice Home Warranty	$50-$60	$517-$660	$60-$85	Washington	B	$500-$3,000	Fast response times, basic plan covers both systems and appliances
American Home Shield	$50-$60	$300-891	$75-$150	Alaska	B	$1,000-$6,000	Longest time in the industry, highest coverage limits, lower chance of claim denial
Select Home Warranty	$36-38	$630-$765	$60-$75	Nevada, New Mexico, Washington, Wyoming	B	$500-$2,000	Cheap rates and fast response times
Liberty Home Guard	$65-$75	$700-$960	$60-$125	Washington, Wyoming	A	$500-$2,000	Best customer service, tons of additional coverage options
Cinch	$28-$40	$330-$816	$75-$150	Alaska, Hawaii	B	$1,000-$2,000	180-day workmanship guarantee, cheap premiums, and lots of free perks

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How to decide if you need home warranty insurance

The pros and cons of home warranties

When you’re buying a house, you’re likely to hear about home warranties from your real estate agent—some may even offer to include a plan with the purchase of the house. You may have also heard that home warranties are a scam or not worth the money.

The reality is that home warranties have benefits and drawbacks depending on your situation. They may be a great choice for you, or they may be a waste of money.

Let’s take a closer look at some of the major pros and cons.

Pro: A home warranty can take the guesswork out of hiring contractors

Warranties can be great for anyone that isn’t handy or that doesn’t want to spend the time or energy looking for a contractor when an appliance is in need of repair. With a warranty, the company will simply send one of their contractors to your home to deal with the situation for you. Easy as that.

Pro: No need for an emergency fund

Perhaps the biggest argument for getting a home warranty is that it can act as an emergency fund for those that don’t have the money already set aside. The average cost to repair a fridge is $200 to $500, which can be stressful if you don’t have the cash—never mind the $5,000 to $10,000 it costs to replace an HVAC system.

Con: You won’t deal directly with contractors

While it can be nice to have a company dealing with your repairs for you, it can also mean that you are stuck with whomever they send. Miscommunications and unexpected expenses are real concerns when you aren’t in direct contact with the contractors.

Also, while warranties should replace the item with a new one of equal or greater value, you could have little or no say about which appliance you receive.

Con: Coverage limits, deductibles, and service fees

The safety net that a warranty provides might not be as big as it seems on paper. Many repairs are cheap enough that they can be done for the same price as the warranty’s deductible and service fees.

Additionally, some replacements are so expensive that they go well beyond the $500-$5000 average coverage limits.

Con: Warranty companies can deny coverage

The most worrisome and controversial drawback—warranty companies frequently deny claims based on negligence. The discrepancy between what you consider normal wear and what the company deems normal wear can be a frustrating gray area.

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How to find affordable homeowners insurance in Illinois

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