Coverage caps haven’t kept pace with inflation. A $3,000 HVAC cap buys meaningfully less replacement coverage today than it did in 2020. Here’s the math.
Most major home warranty companies set their standard HVAC caps years ago. Choice Home Warranty’s $3,000 cap has been their standard for years. Cinch’s $1,500 combined cap hasn’t moved proportionally with costs.
Meanwhile, HVAC replacement costs have increased 20-35% since 2020 in most U.S. markets.
The result: the same cap covers less of the actual replacement cost.
Phoenix, AZ — HVAC replacement cost:
$3,000 cap coverage percentage:
$5,000 cap coverage percentage:
In absolute dollars, the gap between what the cap covers and what replacement costs has widened significantly.
Companies with caps that provide better relative coverage at current cost levels:
Companies where cap stagnation is most problematic:
Check your cap against current replacement costs, not what costs were when you bought.
If you’ve had a home warranty for 3+ years with a fixed cap, the real-terms coverage has declined. What you thought was “HVAC coverage” covers a smaller percentage of actual replacement costs than it did when you signed.
At renewal, evaluate whether the cap is still adequate.
If the answer is no: switch to a higher-cap company or add a separate savings fund to cover the expected gap.
For new buyers: ask specifically about cap history.
Has this cap been the same for 5 years? Have they adjusted it for cost inflation? A company that hasn’t adjusted caps in a rising-cost environment is offering declining real-terms coverage with each passing year.
A few companies have begun offering “enhanced” or “premium” HVAC coverage with higher caps at additional cost. This is a market response to the inflation problem — they know the standard caps are increasingly inadequate but don’t want to raise the baseline cap (which would affect pricing across all customers).
Watch for “enhanced HVAC coverage” add-ons — they may be worth evaluating if the base cap isn’t adequate for your market.