Difference Between Home Insurance And Home Warranties

If you already own a home or are planning to purchase one, you may be confused about the distinction between a home warranty and home insurance. After all, if anything goes wrong, both protect your investment and your wallet.

However, house warranties and home insurance plans provide different sorts of protection. You may determine if you need both by understanding what each one covers.

There is one key difference between a house warranty and home insurance. Home insurance covers damage to your personal property and the structural integrity of your home caused by significant events like natural disasters, burglary, and vandalism. Home warranties cover the internal components of your home, such as systems and home appliances, in the event of damage from everyday wear and tear.

Key Takeaways

  • What is home insurance?
  • What are home warranties?
  • Is warranty the same as insurance?
  • Difference Between Home Insurance and Home Warranties
  • Do home warranties cover existing problems?
  • Do home warranties cover anything?
Difference Between Home Insurance And Home Warranties

What Is Home Insurance?

Homeowners must get house insurance if they have a mortgage on their property, which is the case for most homeowners. In the event of an emergency like a fire or burglary, house insurance will cover both the physical structure of the home as well as the homeowner’s goods. Additionally, medical costs for accidents that people experience while on your property may be covered by home insurance.

A homeowner pays their homeowner’s insurance provider a yearly premium. The typical cost is between $300 and $1,000 per year, depending on the insurance. A homeowner will contact their house insurance carrier to submit a claim if anything is damaged by a catastrophe that is covered by the policy. The house insurance provider will issue the homeowners a check if the insurance policy covers the damage.

Before the homeowner’s insurance provider contributes any money to the claim, the homeowner will often be required to pay a deductible, a set sum of money. A deductible for homeowners insurance may range from $100 to $2,000. Generally, the cost of the annual premium is lower the more significant the deductible.

What Is Home Warranties?

A specific kind of home service contract is a home warranty plan, and businesses operating in the sector are subject to regulation by the independent regulating authorities of every state. Although it has insurance-like features, it is not, according to the law.

Your electrical system, water heater, and kitchen appliances are just a few examples of the covered components under a home warranty that may be fixed, replaced, or serviced.

Home guarantees are especially appealing to homeowners who, when their systems and appliances break down, either don’t have the resources to handle unforeseen, costly repairs or don’t have the time to look out for reliable professionals.

Some homeowners, particularly those with more modern, high-end systems and appliances unlikely to malfunction anytime soon, could save more money without a house warranty if they have the money to pay for any necessary repairs.

You must submit a claim as soon as you become aware of a broken appliance or home system to take advantage of your home warranty. If it’s evident that the covered item has been out of action for some time, certain firms could reject your claim. After you call for assistance, a specialist will come to your house to assess the problem and decide if your current insurance protects it.

Is Warranty The Same As Insurance?

To safeguard their house’s structure, systems, and appliances, homeowners need home insurance and a home warranty. If the house suffers structural damage, the owner won’t be responsible for the expensive repair expenses if they have home insurance.

A house warranty may assist in covering the pricey repairs or replacements if a system or appliance has failed due to regular wear and tear and has caused damage to the structure of the home or the homeowner’s possessions. Homeowners may choose to purchase both a home warranty and an insurance policy. They will cooperate in providing security for each area of your house.

Difference Between Home Insurance And Home Warranties

A house warranty and homeowners insurance have several things in common. For both policies, you pay a monthly premium plus a service charge, sometimes referred to as a deductible in the insurance market. What they cover is where a house warranty and home insurance diverge most.

Many homeowners mistakenly believe their homeowner’s insurance will cover unanticipated costs and liabilities. In actuality, it’s reserved for occurrences like a fire, a burglary, or a natural disaster—events known as dangers in the insurance industry.

A house warranty covers your critical systems and appliances if they break down due to typical wear and tear. Specific house insurance plans may cover appliances and built-in systems; however, these policies often have a large deductible.

Home warranty coverage fills up many of the gaps left by homeowners insurance. In contrast, you may claim with your homeowner’s insurance if your water heater bursts, has a significant leak, or results in structural damage. For example, a home warranty may cover repairing or replacing a faulty water heater when it is worn out after years of usage.

Homeownership is not legally required to have house warranties or home insurance. However, your mortgage lender can insist that you sign up for a home insurance policy when you purchase a house.

Even while homeowners have the option to acquire a house warranty at any time, it can be incredibly alluring to first-time homebuyers who want the assurance that they won’t be exclusively responsible for the costs involved with maintaining their home’s built-in systems and appliances. A house warranty is another option for homeowners looking to attract buyers.

Do Home Warranties Cover Existing Problems?

The quick response is “no” The provider is not required to make repairs or replace an item in your house if it already has a pre-existing issue.

Although the range of appliances and built-in systems covered by home warranties varies from provider to provider, this is the industry standard.

Many service providers will provide two basic plan tiers: one that covers systems or appliances and the other that includes built-in systems and appliances. Before making a claim, it’s crucial to thoroughly read the tiny language in your home warranty contract to be aware of any restrictions and limits.

The following built-in devices and systems are most often covered:


  • Washer and dryer for clothes
  • Refrigerator
  • Microwave
  • Range/Oven/Cooktop/Stove
  • Dishwasher
  • Elimination of waste

Internal Systems

  • System of air conditioning
  • Stoppages in the plumbing system
  • Heating apparatus
  • Ductwork
  • Electrical apparatus
  • Heater of water

Homeowners may tailor their plans by looking through the list of add-on choices offered by each provider. The typical add-on options include, among others, limited roof-leak coverage, other systems and appliances, a good pump, a sump pump, coverage for your pool and spa, and a central vacuum. The additional coverage choices will differ significantly across providers.

Do Home Warranties Cover Anything?

Although house warranties offer certain advantages, they have restrictions and only cover certain things. It’s crucial to read the small print and do your homework to weigh the advantages and disadvantages of these kinds of contracts. Here are a few advantages and disadvantages to consider.


  • A home warranty might provide you peace of mind if you’re buying a property with used appliances and older systems whose warranties have expired or are missing.
  • It’s doubtful that a new resident will already be acquainted with mechanics or contractors who can assist with repairs. In most cases, your home warranty provider handles the search for and employment of a reputable expert.
  • A home warranty as a backup eases the concern since not all homeowners have the DIY know-how to tackle repairs independently. Older homeowners may particularly value how simple it is to dial one number if anything breaks or becomes in need of repair.
  • Home warranties often last longer than manufacturer warranties and provide more comprehensive coverage. They can, of course, be extended.


  • Home warranty providers set cost thresholds for each repair, item, or year. The sky is typically not the limit, and this may vary tremendously.
  • If an item has not been adequately maintained, claims may be rejected by the home warranty provider. This may be frustrating since presenting proof of correct care may be challenging, particularly for new homeowners. Home warranty companies may challenge valid claims because of “improper maintenance.”
  • You may or might not agree with choice made by home warranty providers as to whether to repair or replace a system or an item. A given scenario, like a blowout brought on by a power surge, is probably not covered when it comes to appliances. When replacing an item, they can choose the lowest option or a model they don’t like.
  • Home warranty companies usually choose the contractor or repair specialist, or they may only let you select from a list of pre-approved contractors they work with.
  • You may be unable to choose the brand or model of a new appliance if one has to be replaced. Warranty companies often only accept the least expensive choice.
  • You will need to pay a service call charge each time you have a problem since the home warranty covers not all expenditures. Knowing what is and is not covered is essential. If you wish to update your contract, look at the list of exclusions in the protection plan.


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Home warranties might assist with the expenses when an extensive household system or appliance malfunctions. On the other hand, home insurance offers personal liability protection and protects your house and property against theft and other risks.

Your mortgage lender can insist on a house insurance policy if you have one. Of course, it makes financial sense to secure your investment with reliable insurance coverage, even if it isn’t necessary.

Although house warranties are optional, they may provide an additional level of security and peace of mind. They could be the best option if a conventional warranty no longer protects your systems and appliances, are in danger of failing or would be too costly for you to replace.

Read the small print before purchasing either a house warranty or a home insurance policy to understand precisely what it will—and will not—cover. Find a different insurance if it doesn’t suit your requirements or budget. That way, you won’t be caught off guard if anything goes wrong.

You can learn more from the video below:

About Author

Difference Between Home Insurance And Home Warranties
Lydia Alolade
I am a professional article and e-book writer with 4 years of experience, I write on well research content on cryptocurrency, stocks, loans and finances.

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