Best Home Warranty for Water Heaters (2026): Tank & Tankless

A failed water heater is one of the most common - and most urgent - home warranty claims. Tank water heaters typically cost roughly $900-$1,800 to replace, and tankless units roughly $1,400-$3,900 or more (rough installed ranges; local prices vary). Whether your warranty covers most of that depends on three things: whether your plan includes water heaters at all, the cap, and the exclusions. This guide compares all seven companies we track on each.

Sources: company coverage pages and sample contracts (American Home Shield, 2-10, First American), and third-party reviews (NerdWallet, This Old House, CNBC). Terms vary by state and contract version; confirm in the sample contract for your address.

1. First American Premium - best water heater coverage

First American's contract language explicitly includes tankless water heaters, and NerdWallet reports that the Premium plan has no dollar limit on water heaters (versus $1,000 on Essential). That's the strongest water heater term we found. The catch: First American isn't sold in roughly 13-15 states, and solar water heating equipment, flues, vents and holding tanks are excluded. Read the First American review.

2. American Home Shield - best nationwide coverage

AHS covers water heaters on all three plans, including the systems-only ShieldSilver, and states that coverage "is extended to tankless water heaters and circulating pumps." It's available in every state except Alaska and Hawaii. Note that a water heater that also supplies a hot-water heating system falls under AHS's $1,500 limit for hydronic systems, and AHS's plan page lists rust, corrosion and sediment among exclusions. Read the AHS review.

3. 2-10 Home Buyers Warranty - good tankless coverage at a low price

2-10 covers gas and electric water heaters, including tankless, power-vent and direct-vent units, and its plans start at a low price. NerdWallet has listed a $1,250 water heater cap, which may be dated - check your contract. Read the 2-10 review.

Also consider

• Choice includes the water heater on its Basic plan, with a reported $3,000 per-item cap; sediment build-up and reservoir tanks are excluded.
• Home Warranty of America pays up to $5,000 on most approved repairs, but reduces coverage for rust- and corrosion-related plumbing repairs.
• Select is the cheapest, but a cap of about $500 and depreciated-value replacements mean it may cover only part of a new unit.

Usually covered

• Tank water heaters (gas and electric) on systems and combination plans
• Components such as thermostats, heating elements, gas valves, burners and thermocouples
• Leaks from the tank (repair or replacement of the heater itself)
• Tankless water heaters at some companies (First American, AHS and 2-10 confirm it)
• Circulating pumps at some companies (AHS)

Commonly excluded

• Sediment buildup - the classic denial reason for tank heaters (Choice lists it explicitly; AHS's plan page lists sediment among exclusions)
• Holding, storage or reservoir tanks and fuel storage tanks
• Flues and vents (First American lists them as not covered)
• Solar water heating equipment
• Insufficient capacity - a heater that's simply too small for your household (2-10 excludes it)
• Code-required upgrades - expansion tanks, earthquake straps in some regions, venting changes - unless your plan covers code and permits
• Water damage caused by a leak - that's a homeowners insurance question

The hydronic catch

If your water heater also heats your home through a hydronic (hot-water) heating system, it may be treated as part of that heating system. AHS, 2-10 and First American all apply a lower $1,500 limit to hydronic and combination units.

It depends on your water heater's age and your plan's cap. Tank water heaters commonly last around 8-12 years; tankless units often last longer with maintenance.

Rough replacement costs (estimates)

Sources: NerdWallet, Bob Vila and HomeGuide cost guides. Local prices vary.

A worked example

Your 10-year-old tank water heater fails and needs replacement at $1,500. You pay a $100 service fee.

• Under a plan with no water heater limit (e.g., First American Premium, per NerdWallet): the company pays the replacement; you pay $100 plus any excluded code items.
• Under a plan with a $1,000 limit: you pay $100 plus $500 over the cap.
• Under a plan with a $500 cap and depreciated-value replacement: you may pay $100 plus $1,000 or more.

If your water heater and other major systems are aging, a warranty with a strong water heater term can pay for itself with a single claim. If your heater is new, its manufacturer warranty - often several years on the tank - should handle defects first.

→ Is a home warranty worth it?

1. Flush the tank once a year (or have a plumber do it) and keep the receipt. Sediment is the top reason tank claims are denied.
2. Test the pressure-relief valve annually.
3. Turn off the water supply to a leaking heater right away; further damage from continued use can be excluded.
4. File promptly and describe the symptoms factually (no hot water, leaking from the base, error code).
5. Ask about code items before work starts - expansion tanks, straps, venting - and whether your plan pays for them.
6. Photograph the data plate showing the model, serial number and manufacture date.

→ How to file a home warranty claim

Some do. First American's contracts state that water heater coverage "includes tankless water heaters," American Home Shield says its coverage "is extended to tankless water heaters and circulating pumps," and 2-10 covers "gas and electric water heaters, including tankless, power, and direct-vent units." For other companies, check the sample contract - tankless units are sometimes limited or excluded.

Generally yes, if the leak comes from a covered failure of the water heater - the company repairs or replaces the heater, up to the plan's limit. The water damage the leak causes to floors, walls or belongings is usually excluded and falls under homeowners insurance, depending on your policy. Leaks caused by sediment or corrosion may be denied at some companies.

Usually not when a water heater simply wears out. Homeowners insurance may cover sudden water damage caused by a burst tank, depending on your policy, but not the cost of replacing a heater that failed from age. That's what a home warranty or the manufacturer's warranty covers.

We compared each company's published coverage pages, sample contracts and third-party reviews as of October 2026. Where sources conflict - for example, on 2-10's water heater cap or AHS's treatment of sediment - we say so. Terms vary by state and contract version, so read the sample contract for your address before buying. See how we rank and the complete home warranty guide. More guides: best home warranty for water heaters, heat pumps, electrical systems, dishwashers and appliances, most comprehensive plans, no or low deductible.

General information, not insurance, legal or financial advice. Your contract determines what is covered.