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The reason is very simple. About 85% of the home warranty amount is absolutely profit and commission to the people. It is unbelievable—the vast majority. About 12% of the extended warranty or the home warranty or the electronics warranty is actually the risk that you’re taking. In other words, the cost of the average item breaking down within the warranty period usually runs about 12%. The rest of what you’re paying is profit, commissions, overhead and marketing costs.

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Also, be prepared. Contractors will blame Home Warranty, and Home Warranty will blame Contractors. You have to work both sides to squeeze value out. At first glance one would thing a home warranty is the way to go. But what is the recourse for a young women who purchased a plan and every time the furnace or air conditioner breaks a tech comes out to 'replace' a part. Even though they have stated it is an old unit and needs replaced.