Many homeowners confuse home warranties with home insurance, but they serve different purposes. A home warranty covers repairs and replacements for appliances and systems due to wear and tear, while home insurance protects against major risks like fire, theft, and natural disasters.
In this guide, we’ll break down the key differences between home warranties and home insurance, their costs, what they cover, and which one (or both) you need.
What is a Home Warranty?
A home warranty is a service contract that covers the repair or replacement of major home systems and appliances that break down over time.
What Does a Home Warranty Cover?
- Appliances: Refrigerators, ovens, dishwashers, washing machines, dryers, and microwaves.
- Home Systems: HVAC (heating & cooling), plumbing, electrical systems, and water heaters.
- Optional Coverage: Pools, septic systems, well pumps, and roof leaks (varies by provider).
What a Home Warranty Does NOT Cover
- Structural damage (e.g., foundation issues, roof replacement).
- Damage from natural disasters or accidents.
- Cosmetic issues or routine maintenance.
Home Warranty Cost Breakdown
| Plan Type | Monthly Cost | Service Fee (Per Claim) |
|---|---|---|
| Basic Plan | $30 – $50 | $75 – $125 |
| Comprehensive Plan | $50 – $100 | $75 – $150 |
| Add-On Coverage | Varies | Varies |
What is Home Insurance?
Home insurance is a financial protection policy that covers your home and belongings against damage, theft, and liability claims.
What Does Home Insurance Cover?
- Dwelling Coverage: Protects the structure of your home (walls, roof, foundation) from fire, storms, vandalism, and other risks.
- Personal Property: Covers furniture, electronics, clothing, and valuables if stolen or damaged.
- Liability Protection: Pays for legal fees and medical expenses if someone gets injured on your property.
- Additional Living Expenses (ALE): Covers temporary housing costs if your home is uninhabitable due to damage.
What Home Insurance Does NOT Cover
- Normal wear and tear or mechanical failures.
- Flood or earthquake damage (requires separate policies).
- Intentional damage or neglect.
Home Insurance Cost Breakdown
| Home Value | Annual Premium (Avg.) |
| $100,000 – $200,000 | $800 – $1,500 |
| $300,000 – $500,000 | $1,500 – $2,500 |
| $500,000+ | $2,500+ |
Key Differences Between Home Warranty & Home Insurance
| Feature | Home Warranty | Home Insurance |
| Covers Wear & Tear | ✅ | ❌ |
| Covers Accidents & Disasters | ❌ | ✅ |
| Protects Appliances & Systems | ✅ | ❌ |
| Required by Mortgage Lenders | ❌ | ✅ |
| Covers Structural Damage | ❌ | ✅ |
| Pays for Theft & Liability | ❌ | ✅ |
Do You Need Both a Home Warranty and Home Insurance?
Who Needs a Home Warranty?
- New Homeowners: Protects against unexpected appliance breakdowns.
- Home Sellers: Increases buyer confidence and home value.
- Owners of Older Homes: Covers aging systems that may fail over time.
Who Needs Home Insurance?
- All Homeowners: Required by mortgage lenders and protects against major financial losses.
- Landlords & Renters: Protects against liability and property damage.
How to Choose the Best Home Warranty & Home Insurance
Choosing a Home Warranty Provider
- Look for comprehensive coverage with reasonable service fees.
- Check for positive customer reviews and a quick claim process.
- Avoid companies with hidden exclusions or slow response times.
Choosing a Home Insurance Provider
- Compare quotes from multiple insurers to get the best rate.
- Ensure you have sufficient dwelling and liability coverage.
- Ask about bundling discounts (home + auto insurance).
FAQs & Final Thoughts
FAQs
1. Can I have both home warranty and home insurance?
Yes! Many homeowners choose both for complete protection.
2. Do home warranties cover pre-existing conditions?
Most do not cover issues that existed before coverage started.
3. Is home insurance legally required?
If you have a mortgage, your lender requires home insurance.
Final Thoughts
Both home warranties and home insurance serve important roles in protecting your home. While home insurance covers disasters, theft, and liability, a home warranty helps with repairing or replacing appliances and home systems due to normal wear and tear.
For maximum protection, consider having both policies to ensure you’re covered for all potential risks.
Need a home warranty or home insurance quote? Get started today!
