American Home Shield Review: Is it Worth it?

A thermostat hovering at 52º Fahrenheit or a dryer full of soggy clothes can be a homeowner’s worst nightmare. An unexpected appliance repair bill can really take a bite out of your budget—and the worst part is not knowing how big of a bite it’s going to be.

Many homeowners are turning to home warranty companies like American Home Shield (AHS) for reassurance that system and appliance repairs will be covered with a flat monthly rate, but is it really that easy?

While plan costs vary by location, they tend to range from around $40 for the lowest plan to around $55 for higher plans. You choose which service fee you want ($75, $100 or $125) and that determines how high your monthly fee is. The higher the service fee, the lower your monthly fee.

With the ShieldSilver plan you get the basics:

• Heating and cooling system coverage
• Electrical system coverage
• Plumbing system coverage

For a little more, you can step up to the ShieldGold plan. It covers everything in the ShieldSilver plan plus a little more:

• Kitchen appliance coverage
• Laundry appliance coverage

ShieldPlatinum covers all of those and a little bit more:

• Roof leak repairs
• Free HVAC tune-up
• Unlimited A/C refrigerant servicing
• Coverage for code violations and permits

American Home Shield has a variety of home warranty options to choose from based on homeowners’ needs. The flexible pricing helps you feel in control of your service plan, but coverage restrictions can be frustrating if you haven’t read the fine print.

Things like pre-approved service contractors, service fees, and annual dollar caps are important to understand before signing on the dotted line.

First, what’s the difference between homeowners insurance and a home warranty?

Simply put, homeowners insurance handles all the accidental damages that can happen to the structure of your home—like wind damage, fire, or flooding.

A warranty company, on the other hand, offers home warranties to cover unexpected breakdowns of your home’s systems and appliances due to normal wear and tear. Warranties may cover things like your plumbing, air conditioner, or built-in microwave oven.

Unlike homeowners insurance—which is usually mandatory—home warranties are more like a service contract for appliances or systems that will end up aging or breaking down eventually.

For example, if your toddler uses your dishwasher door as a trampoline and breaks it, a typical home warranty will not cover it. But if your dishwasher door won’t close correctly because the seal has come loose over time, your repair may be covered under a home warranty.

AHS’s warranty service plans cover most things found in your home systems, and you don’t have to worry about getting a home inspection or providing maintenance records. But like most warranty companies, AHS won’t cover preexisting conditions.

When you’re trying to decide which AHS service plan makes sense for your home (and your budget) there are a few important factors to consider.

Many plans may include items you don’t have in your home, newer items that are unlikely to require service, or items that you wouldn’t necessarily call a service professional to fix, like a smoke detector.

For the best price, we recommend getting a quote for the Build-Your-Own Plan before you decide. Other home warranty companies, like Choice Home Warranty, don’t offer this.

Every AHS plan gives you the option to choose your service fee, but you don’t get that choice for nothin’—a lower service fee will cost you more in your monthly premium. Think of the service fee like an insurance deductible: the lower your service fee, the higher your monthly payment, and vice versa.

When you sign your AHS contract, you’ll have 30 days until your warranty goes into effect. Your first payment will be processed at the end of that waiting period. One month isn’t too long to wait, especially if you’re moving into a new house where you’re likely to discover little problems over time.

Let’s say your air conditioning goes out. Once your plan goes into effect, you can call or go online anytime to request service for it. Within 24 hours of your call, AHS will contact an approved local contractor who will then call you to schedule an appointment.

Once the contractor checks out the problem, they will contact AHS with the results of their inspection, and AHS will determine whether or not your warranty covers repair or replacement. If it is covered, the contractor will fix the problem at no additional cost to you.

One of the main issues American Home Shield customers have with their warranties is finding out that a repair is not covered under their service plan.

The easiest way to think of the fine print in an AHS warranty is to understand that you’re not getting a warranty on an entire system or appliance—you’re just getting a warranty on certain components of that system or appliance.

Here are a few other fine print items to watch out for:

• The AHS website may let you request service for an item not covered under your warranty (and you may pay a service fee when you request it).
• If something like a water heater repair is not covered because you have the AHS Appliance Plan, then you’re out your service fee and you’ll have to pay for the repair out of pocket.
• AHS warranties do not cover cosmetic issues or the repair or replacement of any part that does not "contribute to the primary function" of a covered item.
• Warranties do not cover property that was damaged as a result of a malfunction. (Translation: if your laundry room floods due to a broken washer and it wrecks the hardwood floors, AHS will fix the washer but not the floors.)
• AHS’s warranty plans allow for the cheapest fix possible, including the use of rebuilt parts and mismatched parts.
• If the combined cost of labor and materials exceeds a certain amount, AHS will simply "cash out" and pay you the dollar limit (minus any expenses incurred by AHS), leaving you to foot the rest of the bill.

In short, you would be wise to read through a sample AHS contract carefully to fully understand what you’re buying with a warranty.

If you’re worried about the budget crunch of a sudden appliance or system breakdown, an American Home Shield home warranty is a good choice. Just be sure to get familiar with the home warranty policies and fine print so you don’t end up with an unexpected repair bill that isn’t covered and a monthly premium that you can’t get back.

• 5 Things Your Homeowners Insurance Might Not Cover
• 8 Tips to Keep Your Home Safe During Home Repairs
• Home Maintenance and Safety Checklists
• Home Safety FAQ
• 20 Things You'll Need for Your First Home