Home Warranty for Rental Property: Cost, Coverage & Benefits 2025

Managing a rental property means dealing with the unexpected—appliance breakdowns, tenant complaints, and emergency repairs. A home warranty for your rental property can help landlords handle these challenges while minimizing costs and stress. But what exactly does a home warranty cover, and how does it benefit landlords?

A home warranty is a service contract designed to protect key systems and appliances in a property, such as the HVAC system, plumbing, electrical wiring, and kitchen appliances. Unlike homeowner’s insurance, which covers damage from external events like fires or floods, a home warranty focuses on repairs or replacements for mechanical failures due to normal wear and tear. For landlords, this can mean less time searching for contractors and less money spent on out-of-pocket emergency repairs.

Is Home Warranty Coverage Different for Landlords?

Even though you’re not living in the home, your home warranty for your rental property will offer similar coverage to that of a primary residence. Liberty Home Guard has the best home warranty for rental properties with three pre-built plans and the option to custom build a plan package specifically suited to your individual needs because, let’s face it, no two homes are the same.

Weighing the Costs: Is a Home Warranty Worth It for Rentals?

Deciding whether to purchase a home warranty for a rental property requires careful consideration of the financial and operational impact. While a home warranty can be a valuable tool, evaluating the potential benefits and associated costs is essential.

Initial and Recurring Costs

The cost of a home warranty typically includes an annual or monthly premium, which can vary based on the level of coverage and the location of the property. On average, landlords can expect to pay between $400 and $800 per year for a standard plan, with more comprehensive plans costing upwards of $1,000. In addition to the premium, service call fees usually range from $50 to $150 per visit, depending on the provider.

Assessing the Property’s Condition

One of the key factors in determining if a home warranty is worth it is the age and condition of the systems and appliances in the rental property. For homes with older systems (typically over five years),the likelihood of breakdowns increases, making the cost of a home warranty more justifiable. Even newer properties can benefit, as unexpected repairs—like a malfunctioning water heater or electrical issue—can still occur.

Hidden Savings Beyond Repairs

Many landlords overlook the indirect savings a home warranty can provide. For example, the time saved coordinating repairs or replacements, especially when owning multiple properties, can free landlords to focus on other aspects of property management. Moreover, home warranty expenses are tax deductible, potentially lowering the financial burden even further.

Potential Drawbacks

While there are many benefits, it’s also important to consider potential drawbacks. Some warranties have exclusions for pre-existing conditions, routine maintenance, or issues caused by improper installation. Understanding these limitations is essential before committing to a plan.

Pros and Cons of a Home Warranty for a Rental Property

While a home warranty for a rental property can offer valuable benefits—like cost savings and simplified repairs—it’s important to weigh these advantages against potential drawbacks to determine if it’s the right fit for your property management strategy.

1. Cost Savings

One of the most significant advantages of home warranties is the potential for cost savings. Landlords can avoid large, unexpected repair bills, which can be a financial burden. With a home warranty, they only need to pay the service call fee, and the warranty provider covers the rest of the repair or replacement costs.

Consider the average repair costs for common home systems: repairing an HVAC system can cost between $150 and $600 while replacing a water heater often runs between $800 and $2,000. For landlords managing multiple rental properties, these expenses can quickly add up. For example, if two properties each require a major repair within the same year, the combined cost could easily surpass $3,000. However, with a home warranty, these costs are reduced to the predictable service call fees, which can range from just $50 to $150 per incident. Over time, the compounded savings on repairs and replacements across multiple properties can help landlords maintain their bottom line and allocate funds toward long-term investments.

2. Peace of Mind

Home warranties provide peace of mind to both landlords and tenants. Landlords don't have to worry about the financial implications of major system or appliance breakdowns, and tenants know that their landlord is proactive about ensuring their living conditions remain comfortable.

3. Attraction and Retention of Tenants

Offering a home warranty as part of the rental package can make a property more attractive to prospective tenants. It can also help in tenant retention, as tenants are more likely to renew their leases if they know that maintenance and repairs will be promptly addressed through the warranty.

4. Simplified Repairs

Home warranty providers usually have a network of qualified service technicians. This simplifies the repair process as the landlord doesn't need to spend time searching for a reliable contractor. The warranty company manages this for them.

Researching local contractors, verifying their credentials, comparing quotes, and scheduling appointments can take several hours per repair. For a single property, this could amount to 5-8 hours per repair or more, depending on the complexity of the issue. If a landlord manages three or more rental properties, those hours can quickly multiply, resulting in dozens of hours annually spent on repairs.

But with a home warranty, the provider handles the logistics, cutting down the time to as little as a 5-10 minute phone call or online request. This time-saving benefit can be especially valuable for landlords juggling multiple properties or other responsibilities.   
 

5. Predictable Costs

The annual or monthly premium for a home warranty allows landlords to budget for maintenance and repairs more predictably. This stability can be crucial for landlords who want to avoid financial surprises. 

For example, if a landlord pays an annual premium of $600 and a service call fee of $75 per incident, even 3-4 major repairs in a year could be significantly more affordable compared to paying for repairs out of pocket. Additionally, both the premium and service fees are typically tax deductible, offering further savings by reducing taxable rental income.

Con: Coverage Limitations

While home warranties cover many common repairs, they can sometimes come with limitations and exclusions. For example, issues caused by pre-existing conditions, improper installation, or lack of maintenance may not be covered. This can lead to unexpected out-of-pocket expenses if a repair claim is denied. Landlords need to carefully review the terms and conditions of the warranty to avoid costly surprises.

Con: Service Delays

Although home warranty providers offer the convenience of coordinating repairs, landlords may face delays depending on the provider’s service network and technician availability. For urgent issues—such as HVAC failures during extreme weather—these delays could cause tenant dissatisfaction or even result in temporary housing expenses if tenants are unable to stay in the property.

Con: Limited Control Over Service Providers

With a home warranty, landlords typically cannot choose their preferred service technician or contractor. Instead, the warranty company selects from its pre-approved network, which may not always meet the landlord’s preferences. If a repair isn’t completed to satisfaction, the landlord may have limited recourse beyond requesting a follow-up visit.

How to Choose the Right Home Warranty

Selecting the right home warranty for your rental property is an important step toward minimizing risks and maximizing benefits. Follow these steps to make an informed choice:

1. Evaluate Your Property's Needs

Start by assessing your rental property's specific needs. Consider the age of the property, the age and condition of its systems and appliances, and any recurring issues that tenants have reported. This will help you determine which items are most in need of coverage.

2. Research Warranty Providers

Research and compare different home warranty providers. Look for providers with a good reputation, transparent terms and conditions, and a responsive customer service team. Read customer reviews and ratings to gauge the provider's reliability.

3. Understand Coverage Options

Thoroughly review the coverage options each provider offers. Make sure the systems and appliances you want covered are included, and take note of any coverage limits or exclusions. For example, some warranties exclude coverage for pre-existing conditions or improper installations. Understanding these details upfront will help you avoid surprises when you file a claim.

4. Examine Service Call Fees

Most home warranty providers charge a service call fee when repairs are needed, typically ranging from $50 to $150 per visit. Compare fees across providers and factor in how often you anticipate needing service. A low monthly premium with a high service fee could end up being more expensive if frequent repairs are needed.

5. Request Sample Contracts

Request sample contracts from the warranty providers you are considering. Review these contracts carefully to understand the terms and conditions, including any fine print. Make sure everything is clear and aligns with your expectations.

6. Get Referrals

Speak to landlords who have firsthand experience with home warranties. Their insights can help you understand how different providers handle claims, customer service, and repairs. Referrals often provide practical advice you won’t find in online reviews.

7. Consider the Tenant Experience

The home warranty process can directly impact your tenants. Ensure that the provider has reliable, efficient service so tenants aren’t left waiting for critical repairs. Positive tenant experiences with timely maintenance can improve tenant retention and overall satisfaction.

8. Negotiate with Providers

Some providers may be open to adjusting fees or coverage terms, especially if you’re covering multiple properties or committing to a long-term contract. While core terms might be non-negotiable, it doesn’t hurt to ask for discounts or perks.

9. Review the Cancellation Policy

Cancellation terms can vary widely between providers. Some offer money-back guarantees within a certain period, while others may have non-refundable fees. Understanding these terms will give you flexibility in case you need to switch providers.

10. Monitor and Adjust

After purchasing the warranty, regularly evaluate the provider’s performance. Are repairs handled promptly and correctly? Are service technicians meeting expectations? If you encounter recurring issues or poor service, consider switching to a more reliable provider.

Things You Should Know As A Landlord:

One major advantage of having a home warranty on your rental property is that the associated costs are typically tax deductible. The annual premium and any service fees are classified as operating expenses, which means you can claim them to reduce your taxable rental income.

To maximize your deductions, be sure to save all relevant documentation, including receipts and credit card statements. Liberty Home Guard makes this easy by emailing you detailed receipts after each service call.

A home warranty can be a valuable step toward ensuring peace of mind and protecting your bottom line. However, before enrolling in a plan, take time to compare providers, understand coverage terms, and select a plan tailored to your property’s needs.