Home Warranty vs Homeowners Insurance [Differences and Similarities]


If you own a house (or intend to buy one), it’s important to know the main distinctions between a home warranty vs homeowners insurance. In this easy-to-follow article, you’ll learn everything you need to know about home warranty and home insurance so you can decide which one to buy—Or both.

What Does a Home Warranty Cover?

Home warranties cover major systems and appliances for recently acquired and long owned homes. Most home warranty companies offer three kinds of plans:

  1. The appliance only (dishwasher, washer/dryer, refrigerator)
  2. The system only (HVAC, plumbing, electrical systems)
  3. Combination (appliance and system plans combined)

Most home warranty insurance companies let you add more coverage for an extra fee, except for the basic plans. Ordinary add-ons include pools, spas, septic systems, wells, lawn sprinkler systems, and built-in household appliances (like a second dishwasher or air conditioner). Most home warranties don’t come in one-size-fits-all packages, so it’s worth shopping around to find a plan that fits your home’s systems.

To save you time, here are some of the top home warranty companies out there.

Pros and Cons of Home Warranty

Here we provided positive and negative aspects of home warranties.


  • Financial coverage for appliances that need to be replaced
  • Has a streamlined process, where the home warranty company sends a service provider to your home
  • Cheaper fees compared to replacing or fixing an appliance completely


  • Coverage limits on repair costs
  • Potential additional steps such as showing receipts
  • Limited network of service professionals; Warranty companies do not compensate you if you try to DIY

If you’ve recently bought a home, you already have a home warranty, whether it has been included or because you obtained it yourself. If your home warranty is set to expire, though, it’s time to decide whether renewing your contract is worth the cost and if you should renew your home warranty.

Reasons to Have Home Warranty

Should I have a home warranty? Short answer: yes. By having one, you’re protecting yourself against unexpected problems and expensive repairs. Here are some reasons why it is more convenient to have a home warranty plan.

Avoid Risks

If you are settling into a new house, you may expect everything to work perfectly. However, it’s possible that problems may go unnoticed during an inspection or tour, leaving you with non-functional pieces of equipment that could cost you money on repairs down the road. Getting a warranty for your home prevents you from having to worry about randomly repairing something that is not operating.

Protect Your Budget and Save Money

Budget protection is one of the largest reasons why you should have a home warranty plan. Home warranty policies cover appliances and systems from unexpected failures, while homeowners insurance protects your home structure from damage. Another reason for having a home warranty is that they also help save money. The most vital appliance in your home will need a repair at some point, and it will undoubtedly be expensive if it isn’t included in your home warranty package. In the event that you need to pay for the repair with a home warranty, you only have to pay the service fee.

Having Budget-Friendly Coverage

You may be thinking that home warranty plans are expensive, but they’re really not. Home warranty coverage is pretty affordable with the typical annual cost ranging from $300 to $500. In addition, the service fee is only between $50 to $100, making the service quite budget-friendly.

A home warranty plan is convenient for many homeowners to fit into their budgets because the regular costs aren’t that high in comparison to potential damages. You don’t know what will break down next in your home, or how much it will cost to get it fixed or replaced. Your next repair could cost up to thousands of dollars! But you already know how much your home warranty plan will cost, and you can simply fit that number into your budget.

Saving Time and Energy

Having a home warranty plan reduces spent time and energy. There may be cases when home appliances break at the worst possible time, meaning you have to scramble to locate a technician. If the system or device is covered in your home warranty plan, however, you don’t have to worry as much because you’re just one call away from getting the help you need.

Home warranty coverage allows you to relax while your provider does the hard work. In addition, technicians sent to help are licensed to provide the best service.

Estimating a Home’s Market Price

Everyone has their reasons for purchasing home warranty plans; the most common cause, apart from the above-mentioned ones, is to add value to the home. If you are going to sell your house in the near future, you should mention that it has home warranty insurance coverage. This will help entice more buyers and possibly sell the house faster than you thought you would.

Home warranty plans are also able to hold price negotiations, as costs may increase over time. If you don’t want to sell your house and only rent it, a policy will attract tenants as long as they are aware that the home is protected.

Worrying Less About Home Appliance’s Performance

You’ll always worry about the performance of appliances in your home, especially the old ones; that’s exactly why you should have home warranty coverage.

Your home warranty providers are available to help 24/7 and can advise whether or not you can use your old devices without them imminently breaking.

Before you buy a plan, it’s a great idea to ensure that certain appliances are covered by a home warranty or not. Old appliances usually have a sentimental value, and some people get coverage to protect the sentimental items over replacing them.

What Does a Home Insurance Cover?

Home insurance is a type of property insurance that protects against losses and damages caused by natural occurrences. These fall under the category of perils policy.

Home insurance has three main functions:

  • Repair your house, yard, and other structures
  • Repair or replace your personal belongings
  • Cover personal liability if you’re held legally responsible for damage or injury to somebody else

Does homeowners insurance cover appliances? Yes, if they fall under peril. Homeowners insurance will adjust if an event is covered under your policy, and it’ll also cover you in cases where you injure someone else or cause property damage. Homeowners’ insurance coverage isn’t required by law, but your lender will require you to insure your home if you have a mortgage. Even if you don’t have a mortgage, home insurance is always a wise purchase, giving you both property and liability coverage.

In line with the Insurance Information Institute (III), a basic homeowners insurance policy includes four types of coverage:

Coverage for Home Structure

This pays to rebuild the house if it is damaged or destroyed by a covered situation. Most policies cover other property structures such as garages, tool sheds, decks, and gazebos.

Coverage for Personal Belongings.

This part covers your furniture, clothes, sports equipment, and other personal belongings if they incur damage. If you have any precious items, you might need a personal property floater to ensure you’re competently protected.

Liability Protection

Liability coverage protects against lawsuits for injuries and property damage that policyholders, their family members, and pets cause to other people.

Additional Living Expenses

They pay for hotels, meals, and other living expenses if your home is unlivable.

What Does Homeowners Insurance Cover?

Homeowners insurance generally covers:

  • The home
  • Other structures on the property
  • Personal property
  • Liability for injuries or damage to somebody else’s property

Homeowners’ insurance policies provide coverage for damage caused by lightning strikes, fires, windstorms, and hail, but not all-natural disasters are thoroughly covered by homeowners insurance. For instance, damage caused by earthquakes and floods is not generally covered by homeowners insurance. You may need to purchase separate insurance policies for protecting your possessions against that kind of risk. So, homeowners insurance vs home warranty shouldn’t be a question, because both options protect you in specific ways.

Dwelling Protection

Dwelling protection is a primary coverage aspect of homeowners insurance, which helps cover the home structure where you live (the house’s foundation, walls, and roof). Dwelling protection might also help protect other structures connected to your home, such as a garage or deck, against a certain kind of risk.

Other Structures Protection

Many homeowners insurance policies include coverage for other structures on your property that are detached from your house, like a garage, fence, or shed.

Personal Property Protection

Homeowners insurance does not just help to cover damage to your home, but it also maintains coverage for personal belongings you keep inside. Many insurers propose additional content that helps protect your personal stuff.

Liability Protection

A typical homeowners insurance policy provides liability protection when someone not living with you is injured on your property. You might be able to raise your liability coverage limits by adding a personal umbrella policy; your agent can explain what versions are available to you.

Coverage Limits

Each home insurance policy is liable to a limit—the highest amount your policy pays for a covered loss. You might be able to adjust your coverage limits to your needs taking some things into consideration, such as the value of your home and personal belongings.

With all of that in mind, the choice between home insurance vs a home warranty always depends on your needs and how much you want to be protected.

Reasons to Have Homeowners Insurance

Investing in your home’s protection can save you from potentially losing your house and all of your personal belongings in the future. Here are a few extra reasons to purchase homeowners insurance:

Put Your Mind at Ease

If it’s the peace of mind and convenience you’re searching for, you can get it by obtaining home insurance; with a policy, you can stop worrying about what could happen with your property. It’s always better to be safe than sorry when it comes to something as crucial as your personal items.

Be Protected Against Property Damage

Having insurance means that even when something terrible happens, you’re not left with a complete loss.

Protection Against Vandalism and Theft

By having home insurance, you will be protected in case someone breaks into your house. You wouldn’t want to lose any personal items and not be able to replace them, so home insurance makes sure that if anything gets taken, the loss will be covered.

Coverage for Water Damage

If you live somewhere where it rains or floods often, home insurance is necessary., as standing water can damage your home and possessions. Most homeowners insurance policies cover both.

Be Covered for Personal Liability

If anyone gets hurt on your property, you could be held responsible. Many home insurance policies include an all-risk policy so that you don’t get stuck with the cost.

Key Takeaways

Home warranties cover major systems and appliances
Home insurance covers the property in case of losses or damages
Home warranty costs between $350 and $600 on average
Home insurance costs $1200 a year

Similarities and Differences of Home Insurance and Home Warranty

A home warranty and home insurance policy work in the same way. Both have a yearly premium and deductible, although a home insurance’s premium and deductible are often much higher than home warranties. The essential differences between a home warranty and home insurance are in what they cover.

What’s the difference between a home warranty and homeowners insurance? Home insurance protects your home from the things that might happen, like theft, fires, or natural disasters. On the contrary, a home warranty helps you save money when home appliances stop working because of normal wear and tear. A home warranty covers service, repair, or replacement of your home’s major systems, generally for a one-year contract.

Another difference is that home insurance is generally required for homeowners, while a home warranty plan is not required. Home warranties and home insurances protect different parts of a home; together, they can save a homeowner’s budget from expensive repairs in any situation.

Bottom Line

You may wonder if it is better to choose between a home warranty vs home insurance, or just obtaining both of them. Homeowners need to have home insurance and a home warranty in their home for the best possible protection of the home’s systems and appliances. In case of damage to the house structure, the owners won’t have to pay high repair costs if they possess home insurance.


How much does a home warranty cost?

A home warranty, on average, can vary between $350 and $600.

How much does home insurance cost?

The standard cost of homeowners insurance is about $1,200 a year, although many factors play a role in prices, such as your city and state.

Are home warranty and home insurance the same?

No. They are two different things, although they operate in the same way. Both have a yearly premium and a deductible, for example. The main difference between them is what they specifically cover.

Why do I need a home warranty?

One main reason for having a home warranty is that it can help save money.

Do I need a home warranty if I have home insurance?

Homeowners need home insurance and a home warranty for the best possible protection of systems and appliances.

What is a service call fee?

This fee covers the labor of a contractor to come out and run diagnostic tests to determine any issues.

What does a home warranty not cover?

Home warranties generally don’t cover cosmetic defects, scratches, or dents to kitchen appliances, as well as damage from pests, improper installation, misuse, or neglect.

What are coverage limits?

An insurance coverage limit determines the maximum amount of money an insurance company will pay for a covered claim.

Is it worth having a home warranty?

Yes. You’ll be paying an extra bill, but the cost could be worth the added expense.

Is it worth having a home warranty for HVAC?

Home warranties are being offered for HVAC repairs caused by normal wear and tear, which is why they require you to maintain your HVAC system to receive coverage. So, it depends.

Does the home warranty cover water damage?

No. A home warranty doesn’t cover water damage.

Is a home warranty a waste of money?

Nope! Home warranties can save your home and appliances while protecting your budget from unexpected expenses.

Why do you need both a home warranty and homeowners insurance?

Homeowners need home insurance and a home warranty to receive the highest level of protection. If you’re deciding between a home warranty vs homeowners insurance, go ahead and purchase both of them.


I’m an entrepreneur by profession and an artist by passion. I do business to pay the bills and make music to bring the thrills. Thanks to a bachelor in Business Administration, I'm well-versed in all things business. Owning a construction company certainly helps, too, but it also brings out my love for building and home protection.

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