Coverage cap

"The maximum dollar amount a home warranty will pay toward repair or replacement of a covered system or appliance, either per claim or per contract year."

Why it matters

A $1,500 cap on HVAC sounds reasonable until your 12-year-old compressor fails and the replacement quote comes in at $4,200. The cap is what determines whether the warranty saves you money on a major failure or just absorbs the easy claims. Caps vary wildly across carriers: $1,500 to $5,000 for HVAC, $1,000 to $3,000 for appliances. Some carriers use per-claim caps, others use aggregate annual. The contract is the only authoritative source.

Best practices

Compare caps not premiums when shopping. A $50/month plan with a $5,000 HVAC cap may beat a $40/month plan with a $1,500 cap if you have an aging system. Ask the carrier for the contract document, not just the brochure.

Frequently asked

Does the cap reset every year?

Per-claim caps reset every claim. Aggregate annual caps reset on the contract anniversary date. Some carriers use both: a per-claim cap and a separate annual aggregate.