Is a Home Warranty for Rental Property Worth It?

Should landlords buy a home warranty for rental property? Learn the benefits of having protection for home systems and appliances for your rentals.

Home warranty rentals

These days, you need to do everything you can to maximize your money and make it work for you. That means making the right investments to grow your wealth over time — and making smart moves to protect those investments.

As a landlord, you need more than just a casual interest in investments and making money. You need to take care of your real estate investment in order to protect its value, and you have a limited amount of money to do it with. Have you thought about capitalizing on something just as important as the value of your investment itself: helping to protect your budget when it comes to maintaining those investments? 

A home warranty for rental property can do just that.

What is a home warranty for a rental property?

A home warranty on your rental property is a home service contract that will cover the cost of repairing or replacing certain, covered home systems and appliances. An American Home Shield home warranty covers failure of up to 21 home systems and appliances due to wear and tear. The Appliances Plan covers up to 10 major home appliances, including the refrigerator, dishwasher, washer and dryer, stove and garbage disposal. The Systems Plan covers up to 11 home systems like plumbing, electrical, HVAC, ceiling fans, light fixtures, central vacuums and garage door openers. The Combo Plan covers all 21 systems and appliances. 

As a landlord, you know that maintaining a home is expensive, especially when it’s a rental property. A home warranty can significantly defray many of the expenses associated with maintaining both your primary residence and your rental property. You can buy a separate home warranty to protect each of your properties. If your rental unit is on the same site as your primary residence and less than 750 square feet, it can be covered with the Guest Unit add-on of your own home’s warranty. 

There’s more to learn about what a home warranty covers, but the most important question is whether to have one at all.

Why should I purchase a home warranty for rental property?

For the same reason you need a home warranty for your personal residence: obtaining a home warranty is probably one of the smartest investments you can make for any property. 


Because your homeowners insurance only covers what could happen (like a fire or flood). A home warranty, on the other hand, covers what will happen (like an appliance breakdown). Regardless of whether you live in the house or rent it out, it’s still a house. And it’s still going to incur those inevitable issues with major components of its systems and appliances. 

And who is responsible for the appliances in a rental property? 

Usually, that’s you, the landlord — unless it’s something the tenant owns and brought with them, like a washer and dryer. As a landlord, you’re required to keep the home’s major appliances and systems in good working order, so that your tenants’ home is liveable. With a home warranty, you can rest assured that covered breakdowns of your appliances in your rental property will be resolved as quickly and efficiently as possible, with only such out-of-pocket costs as your home warranty prescribes.

The same goes for the rental property’s systems — when the A/C, heat, electricity or plumbing goes awry at your rental unit, who does the tenant call? You. And who can you call? Your home warranty company.

Can a renter buy a home warranty?

Tenants cannot buy a home warranty; landlords are responsible for carrying the home warranty at the rental property. The equivalent of home warranty for renters is renter’s insurance however, this does not negate the need for a home warranty, either. 

Careful landlords make sure all their tenants have renters insurance, to protect their personal property from catastrophic loss or theft. Renters insurance will cover repairs of appliances that your tenants actually own — so if they bring in their own washer and dryer, for example, or their own microwave, breakdowns of those appliances would have to be covered under the tenant’s renters insurance. But breakdowns of appliances you, the landlord, own would have to be covered by your rental property home warranty or — if you don’t have one, you’ll have to pay to repair or replace them completely out of your own pocket.The tenant cannot purchase a home warranty for your home, and is not responsible for keeping your rental property in a liveable condition.

Should I get a rental property home warranty if i don’t live near my rental property?

If you live in a different city or even state from your rental property, a home warranty is the perfect way to coordinate qualified local service without needing to be in the area. You can just request service where you are, or, depending on your plan or preferences, your tenant can request service directly from the home warranty company, and they’ll send a local service professional with whom they already have a standing relationship.

Even if you do live near your rental property, though, you probably don’t have the time or the skills to personally perform every appliance and home systems repair in your rental property. Even lining someone up to do the work can be time-consuming and frustrating, especially if you can’t rely on a trusted local handyman or skilled family member to help. You don’t need to spend time asking around or roll the dice on some random handyman from a Google search. You can arrange for timely repairs to your rental property through your landlord home warranty provider.

American Home Shield members can simply login to the My Account portal to submit a service request.

Is the coverage the same for a “landlord home warranty” as it is for an owner-occupied home warranty?

Absolutely. Even though you’re not living in the home, you own it, so you’re covered. The best part? Home warranty companies that provide flexible plans, like American Home Shield, let you tailor a plan that meets your needs for that particular property. The Combo Plan covers 21 home systems and appliances. 

Does the tenant own the appliances? Choose a Systems Plan to cover things like HVAC and plumbing. 

Does the property have a pool or spa? Do you want protection for roof leaks? American Home Shield’s Add-On coverage lets you select the extras you need. 

Explore plan options to find what works best for your rental property.

What should I consider when deciding about a home warranty on rental property?

It’s important to consider the age of the rental home and its accompanying appliances and systems. If it’s an older home with older appliances and systems, home warranty protection should be obvious. Even if it’s a newer home, you never know what can go wrong — even newer appliances and home systems can still fail, especially under heavy use, like they often are in rental properties.

Another factor to consider when deciding on a home warranty for your rental property is whether or not you have more than one rental property. The more rental properties you have, the more you have to manage and the cost of a home warranty may be a small price to pay for convenience. 

Also, when purchasing a home warranty make sure you understand every detail about the warranty. What does it cover and exclude? The last thing you want to find out when placing a service request is that that particular appliance or system is not included in the plan. Will you be the one contacted by the person contracted to do the repairs, or will he or she communicate directly with the tenant? How is the service call fee paid (billed to you, collected from the tenant at the time of repair, etc.)? If applicable, see if the company will work directly with your property management company. That way, you don’t even need to worry about arranging repairs to your rental property yourself. Your property management company can file service requests as needed, your tenants can get the repairs they need, and you can relax and enjoy more of the benefits of owning an investment property.

What are some of the benefits of having a home warranty for my rental property?

As a landlord, you’ve placed a lot of responsibility on your shoulders. Why add to that weight by spending time worrying about finding and scheduling repairmen, electricians or plumbers when covered breakdowns occur at your rental property? 

Let the home warranty company handle that. The last thing you want to find out when placing a service request is that that particular appliance or system is not included in the plan. Also — and this is especially important if you own multiple rental properties — having a home warranty in place will help you to control your covered repair or replacement expenses. You won’t be seeing any unexpected and surprising fees as they are outlined when you first sign up with a home warranty plan. Sure, you’ll have to pay the annual contract fee along with service call fee(s), but that can be a drop in the bucket when it comes to paying for repairs or all-new items that might have been covered by the warranty, right? 

Is a home warranty on a rental property tax deductible?

Another bonus? Since you’re a landlord, the cost of the home warranty on the rental property may be tax deductible — the annual premium and service fees may be considered operating expenses that can be claimed (of course, you must verify any tax benefits with your tax professional). That certainly could help, right?

Should I set up a company for my rental property?

In general, it’s a good idea to set up an LLC for your rental property or properties, to protect your personal assets from liability if you’re sued as a result of your activities as a landlord. You can buy your rental home warranty through the LLC and write off plan costs on your taxes. 

Of course, be sure to consult your accountant and tax professional before making these types of business decisions. 

Ready to help protect that budget? Check out how flexible an American Home Shield Home Warranty can be. Compare plans and get a free quote today.

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