Home Warranty vs. Home Insurance: Key Differences

A home warranty is a complement to, not a replacement for, your home insurance plan.

Janet Berry-Johnson
Janet Berry-Johnson
  • 8+ years writing about insurance, taxes, and personal finance

  • Certified public accountant

Janet applies her experience in personal finance, taxes, and accounting to make complex financial topics accessible. Her byline has appeared on numerous web media.

Featured in

media logomedia logomedia logomedia logo
Danny Smith
Edited byDanny Smith
Photo of an Insurify author
Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

Featured in

media logo

Updated January 2, 2024 | Reading time: 4 minutes

Advertiser Disclosure

At Insurify, our goal is to help customers compare insurance products and find the best policy for them. We strive to provide open, honest, and unbiased information about the insurance products and services we review. Our hard-working team of data analysts, insurance experts, insurance agents, editors and writers, has put in thousands of hours of research to create the content found on our site.

We do receive compensation when a sale or referral occurs from many of the insurance providers and marketing partners on our site. That may impact which products we display and where they appear on our site. But it does not influence our meticulously researched editorial content, what we write about, or any reviews or recommendations we may make. We do not guarantee favorable reviews or any coverage at all in exchange for compensation.

Why you can trust Insurify: Comparing accurate insurance quotes should never put you at risk of spam. We earn an agent commission only if you buy a policy based on our quotes. Our editorial team follows a rigorous set of editorial standards and operates independently from our insurance partners. Learn more.

When you buy a home, you might be offered a home warranty, and it’s important to understand the differences between home warranties and home insurance. A home warranty covers appliances and systems, while homeowners insurance covers your home’s structure and personal belongings and protects you against liability claims.

Here’s a closer look at the main differences between a home warranty plan and a homeowners insurance policy.

Shop Home Insurance Policies

See quotes from top Insurify partners in minutes

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualTravelers

Home warranty vs. home insurance

Though a home warranty and home insurance might sound similar, they serve distinct purposes and offer different types of protection.

 Home WarrantyHome Insurance
PurposeCovers repairs or replacement of home systems and appliances due to wear and tear1Protects against damage from unforeseen events, like fires, storms, and theft
CoverageTypically includes major appliances, electrical systems, plumbing, heating, and cooling systemsCovers the home’s structure, personal belongings, and liability for others’ injuries
DurationTypically annual contracts that are renewable each year; some companies may offer monthly contracts1Typically annual policies are subject to renewal and reassessment
CostAnnual premium plus service fees per repair visit1Annual premium based on home value, location, and coverage level
Typical requirementMay be purchased by homeowners for peace of mind or by sellers to enhance home sale appealGenerally required by mortgage lenders as a condition of the loan

What a home warranty covers

Think of a home warranty as a service contract for your home. Much like a warranty for an electronic device, a home warranty covers the cost to repair or replace systems and appliances that break down over time due to normal wear and tear.

While exact coverages vary from contract to contract, they usually cover your HVAC, electrical, and plumbing systems as well as appliances like your dishwasher, refrigerator, oven, washing machine, and dryer.[1]

Pros and cons of a home warranty

Pros
  • Lowers the cost of repairing or replacing covered appliances and systems

  • Saves homeowners the hassle of searching for a reliable service technician and negotiating costs

  • Offers peace of mind — especially for people who aren’t handy with repairs

Cons
  • Comes with limitations and may exclude issues due to improper maintenance, pre-existing conditions, or unusual wear and tear[1]

  • Service fee required every time a technician visits, which can add up after multiple issues or if the first repair doesn’t solve the problem

  • No freedom to choose your own service providers

What home insurance covers

Home insurance is like a safety shield for your home. It provides financial protection against unforeseen events, like fires, storms, theft, and even liability for accidents occurring on your property. It’s not about the aging of your home or its contents but about protecting your finances from sudden, catastrophic events.

While coverage can vary from policy to policy, most home insurance policies include:

  • illustration card https://a.storyblok.com/f/162273/100x100/c922a01b77/house.svg

    Dwelling coverage

    Dwelling includes the main structure of your home. In general, if your home is damaged or destroyed by a disaster like fire, lightning, hail, or a hurricane, your insurance will take care of the costs to repair or rebuild.

  • car in carage

    Other structures coverage

    Gazebos, sheds, and detached garages might also be covered to about 10% of the coverage limit you have on your house.

  • illustration card https://a.storyblok.com/f/162273/100x100/32ed42213e/personal-property.svg

    Personal property coverage

    Damage to your personal belongings, including your furniture, electronics, clothing, equipment, and more, is also covered. You’re also covered if the items are stolen or vandalized.

  • illustration card https://a.storyblok.com/f/162273/x/abffe6238f/financial-protection.svg

    Personal liability coverage

    You’re at financial risk if someone is injured on your property and decides to sue. Personal liability will cover medical bills for people hurt at your home. Additionally, accidental damage your household members or pets cause to other people’s property is covered.[2]

Does Homeowners Insurance Cover Wildfires?

Does Homeowners Insurance Cover Wildfires?

Who should get a home warranty?

A home warranty is particularly beneficial if you’re uncomfortable attempting DIY repairs or lack a network of reliable service professionals. New homeowners are often unfamiliar with the maintenance needs of a home and can find value in the safety net a home warranty provides.

A home warranty can also be appealing for people purchasing older homes, where appliances and systems might be nearing the end of their lifespan. Home sellers may also invest in a home warranty to make their property more attractive to buyers.

Read the fine print on your warranty

Before buying a home warranty, it’s important to read the fine print.

Home warranties have specific terms outlining what is and isn’t covered. For example, some policies may cover one refrigerator but not a second refrigerator that you might keep in your garage or basement, unless you specifically add it.[3] Knowing these details up front helps you avoid unexpected coverage denials later.

Home warranties can also have exclusions for pre-existing conditions, improper installation, or unusual wear and tear. Understanding these exclusions ensures you understand when and how your service contract applies.

Who should get home insurance?

Home insurance is essential for every homeowner, regardless of their financial circumstances. While wealthy homeowners could self-insure, the cost of repairing or rebuilding after a catastrophic event like a fire or hurricane can be astronomical. Home insurance provides an affordable safety net against such substantial financial losses.

In addition, one of the most beneficial aspects of home insurance is liability protection. If someone is injured on your property or you, a family member, or a pet cause harm to others or their property, you could face substantial legal and medical bills. The liability coverage your home insurance company provides can protect you from such claims.

Finally, if you have a mortgage, the lender usually requires home insurance. It protects the lender’s interest in your property as much as it does yours.

Find Affordable Home Insurance

See rates from top home insurers in minutes

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualTravelers

Home warranty vs. home insurance FAQs

To help clarify the difference between home warranties and home insurance, here are answers to some commonly asked questions.

  • What’s the difference between home insurance and a home warranty?

    Home insurance provides financial protection against unforeseen events like natural disasters, theft, and liability for accidents on your property. In contrast, a home warranty is a service contract that covers repairing or replacing home systems and appliances due to wear and tear.

  • Why might a homeowner need both a home warranty and home insurance?

    Homeowners may need both a home warranty and home insurance because they serve different purposes. Home insurance protects against significant, unforeseen events, like fires or storms, while a home warranty covers repairing or replacing aging appliances and systems.

  • Can you hire your own contractor with a home warranty?

    Generally, you can’t hire your own contractor with a home warranty. When a covered system or appliance needs repair, the home warranty company sends a technician from their network of service providers.[4] This ensures a vetted professional does the work, but it also means you have less of a say in the matter.

  • Does a home warranty cover water damage?

    A home warranty typically doesn’t cover water damage. It covers repairing or replacing appliances and systems due to malfunction or wear and tear, but not the damage they might cause. For example, your home warranty contract might replace a leaking hot water heater but not cover damage the leak causes to your flooring.[5]

Sources

  1. National Home Service Contract Association. "Frequently Asked Questions (FAQ)." Accessed November 30, 2023
  2. III. "What is covered by standard homeowners insurance?." Accessed November 30, 2023
  3. Home Warranty of America. "What Is a Home Warranty?." Accessed November 30, 2023
  4. Landmark Home Warranty. "When Can a Home Warranty Customer Hire Their Own Contractor?." Accessed November 30, 2023
  5. 2.10. "Does a Home Warranty Cover Water Damage?." Accessed November 30, 2023
Janet Berry-Johnson
Janet Berry-Johnson

Janet Berry-Johnson, CPA is a freelance writer with a background in accounting and income tax planning and preparation. She's passionate about making complicated financial topics accessible to readers. She lives in Omaha, Nebraska with her husband and son and their rescue dog, Dexter. Visit her website at www.jberryjohnson.com.

Danny Smith
Edited byDanny Smith
Photo of an Insurify author
Danny Smith
  • Licensed auto and home insurance agent

  • 4+ years in content creation and marketing

As Insurify’s home and pet insurance editor, Danny also specializes in auto insurance. His goal is to help consumers navigate the complex world of insurance buying.

Featured in

media logo

Compare Home Insurance Quotes Instantly

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualTravelers

Latest Articles

View all