Is a home warranty worth it in Texas?
It depends on what the contract covers, its limits and exclusions, and its fees, so no rule makes it worth it or not for everyone. In Texas a home warranty is a residential service contract, sold by companies licensed by the Texas Department of Licensing and Regulation (TDLR), and TDLR says you are not required to buy one when you buy a home. Check the license, read the exclusions, and use TDLR's list of questions before you sign.
The verdict: it depends on the contract
No Texas agency says a home warranty is or is not worth buying, and we found no official figure on how often claims are paid. What decides it for you is in the contract itself: which appliances and systems it covers, what it excludes, how much it will pay, and what each service call costs you. Texas law requires every contract to spell those out, so you can judge before you sign.
A home warranty may be a better fit when the contract clearly covers the appliances and systems you own, with limits and fees you understand. It is a poorer fit when your main items are excluded, capped low, or likely to be refused as pre-existing conditions. Those are the points TDLR tells you to ask about.
What Texas calls a home warranty
In Texas, a home warranty is a residential service contract. The Texas Department of Licensing and Regulation (TDLR) licenses the residential service companies that sell them. TDLR took over the program from the Texas Real Estate Commission on September 1, 2021.
The law moved too. TDLR says House Bill 1560 (2021) repealed the former Residential Service Company Act, Occupations Code Chapter 1303, and amended Chapter 1304 to include residential service contracts as a type of service contract. Chapter 1304 defines a residential service contract as a service contract under which a provider agrees to service, repair or replace a structural component, an appliance, or an electrical, plumbing, heating, cooling or air-conditioning system of a home after an operational or structural failure, a power surge, a defect in materials or workmanship, or normal wear.
TDLR also draws two lines:
- It is not a builder warranty, which typically comes with new homes or remodels and covers permanent parts of the home.
- It is not homeowners insurance, which the Texas Department of Insurance regulates.
You do not have to buy one
TDLR says: "you are not required to purchase a residential service contract when you purchase a new or existing home." Occupations Code 1304.161 adds that no person, including a bank, a lending institution or the seller of a product, may require you to buy a service contract as a condition of a loan or the sale of property.
Step 1: check the license
TDLR says consumers should always check that the company is licensed and should review contracts carefully. Search TDLR's License Data Search, choosing the license type "Service Contract Providers." It shows active licenses only; if you cannot find a company, TDLR's customer service line is 800-803-9202. You can report unlicensed companies to TDLR.
Step 2: ask TDLR's questions
TDLR lists these questions to ask when choosing a home warranty company:
- How much will the plan cost?
- How long does the plan last?
- What specific items does the contract cover?
- Are there limits to the coverage, or incidents that would not be covered?
- Is there a limit to how much the company will pay?
- Would a pre-existing condition void coverage?
- Is there a fee for service calls?
- Who decides which company makes the repairs?
- How fast will repairs be made?
- Will the plan replace an item that can't be repaired?
Step 3: compare what each contract must state
Occupations Code 1304.156 requires each contract to state these items in clear language, so you can line up two contracts side by side:
| Item the contract must state | What to compare |
|---|---|
| Provider name and address | Match it to the TDLR license search |
| Purchase price and terms of sale | The total cost for the full term |
| Deductible amount | What you pay on each claim |
| Products and services covered, and any limitation, exception or exclusion | Whether your own appliances and systems are covered |
| Whether it covers or excludes preexisting conditions and consequential damages | Reasons a claim could be refused |
| Cancellation terms | How and when either side can cancel |
| Transfer restrictions | Whether it moves to a buyer if you sell |
| Your duties | Maintenance and owner's manual requirements |
Who is selling it. Under 1304.157, if the person selling you the contract is paid by the company but not employed by it, the contract must carry a boldface notice saying the company pays persons not employed by the provider for the sale of the contract.
Your right to cancel
Under 1304.1581, a service contract must let you cancel at any time. Cancel before the 31st day after purchase and the provider refunds the full price, minus any claims paid, with no cancellation fee. Cancel later and you get a prorated refund for the remaining term, minus claims paid, and the provider may charge a reasonable cancellation fee of no more than $50.
If a claim is delayed or denied
TDLR has a Residential Service Contract Ombudsman who acts as a go-between with the company, including for claim delays or denials: 512-936-3049. To file a complaint, use the "File a Complaint" link on the TDLR website.
Buying or moving into a home? The moving to Texas checklist covers every agency deadline and bill, and how to lower your home insurance cost covers the insurance side.
Common questions
Do I have to buy a home warranty when I buy a house in Texas?
No. TDLR says you are not required to purchase a residential service contract when you buy a new or existing home, and state law says no one may require a service contract as a condition of a loan or the sale of property (Occupations Code 1304.161).
What does a Texas home warranty cover?
TDLR says residential service contracts cover the cost of repairing or replacing large home appliances or residential electrical, plumbing, heating or air conditioning systems damaged by a power surge, a defect in materials or workmanship, or normal wear. Each contract must list its own limits and exclusions.
Can I cancel a home warranty in Texas?
Yes. State law says a service contract must let you cancel at any time. If you cancel before the 31st day after purchase, you get the full price back minus any claims paid, with no cancellation fee; after that, you get a prorated refund and may be charged a reasonable fee of no more than $50 (Occupations Code 1304.1581).
Who do I call if my home warranty company denies a claim?
TDLR has a Residential Service Contract Ombudsman for claim delays or denials, at 512-936-3049. You can also file a complaint on the TDLR website.
Is a home warranty the same as homeowners insurance?
No. TDLR says residential service contracts are not builder warranties or homeowners insurance, and that homeowners insurance is regulated by the Texas Department of Insurance.
Sources
- TDLR, What Should I Know About Residential Service Contracts? (TDLR CP Form-211, Oct. 2022, read 2026-10-20)
- TDLR, Residential Service Companies (Home Warranties) transfer notice (Sept. 1, 2021, read 2026-10-20)
- TDLR, Commission adopts rules (June 10, 2024, on HB 1560 and Chapter 1304, read 2026-10-20)
- Texas Occupations Code, Chapter 1304, Service Contract Providers (Texas Legislature, read 2026-10-20)
- TDLR, License Data Search (data last updated 10/20/2026, read 2026-10-20)
- TDLR, Complaints and Enforcement (read 2026-10-20)
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