Home Protection: Difference between Home Warranty and Home Insurance


Unforeseen situations arising at and risking your home can be a major disaster in a family’s finances. That’s why having a warranty or insurance is crucial to avoid these disasters from having an enormous financial impact. With that said, it’s a good idea to know the difference between home warranty and home insurance and fully understand their features and benefits.A home warranty generally covers the repairs and replacements of appliances and systems at home as a result of normal wear and tear. On the other hand, home insurance help homeowners get compensation from structural damage or loss of property caused by fire or theft.

Before making a final decision, check out a more in-depth look at the differences between home warranty and home insurance.

Difference between Home Warranty and Home Insurance

Discretionary (Optional) or Mandatory

Home Protection

When it comes to a home insurance policy, it is usually mandatory, in which a bank would require home insurance before a mortgage or home loan is issued. A home insurance policy usually offers a deductible or amount of money paid when filing a claim so that it will take care of any additional costs.

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On the other hand, a home warranty plan usually does not require paying a deductible. You’re only charged a service call fee of $100 or more. It’s purely optional and won’t be required by the bank or mortgage lender. Learn more about home warranty plans at Choice Home Warranty reviews.

Costs and Contract

A home insurance policy is renewed every year at an average annual cost of $300 to $1000. On the other hand, a home warranty has a 12-month contract that is also renewable with a yearly coverage fee that usually starts at $400 and above. Home warranty policy plans come with a basic level of protection for the cheapest option, while more expensive insurance plans provide broader coverage and a lower out-of-pocket cost than a basic plan.

Policy Coverage of Home Insurance Warranty and Home Insurance

01. Homeowners Insurance Coverage

Home Insurance

A homeowner’s insurance policy is generally your protection in major disasters. It safeguards you and your home from damages and losses caused by the following:

  • Natural Disaster like typhoon, hail storm, or tornado
  • A fire caused by a gas leak, electrical problems, etc.
  • Theft
  • Vandalism

Note: A home insurance policy covers both the interior and exterior parts of your home as well as your personal property. In addition, it protects you from liability if a person is injured on your property.

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02. Home Warranty Coverage

Home Warranty Coverage

A home warranty, in contrast with home insurance, serves as a service contract. It typically covers essential home appliances and systems, which provide repair or replacement in the event of a malfunctioning or complete breakdown.

Home warranty contract usually includes the following areas of coverage:

  • Plumbing
  • Electrical
  • Heating and cooling systems
  • Appliances, like stove, oven, refrigerator, dishwasher, washer, and dryer, and garbage disposal unit.

Note: Most home warranty companies offer additional coverage for your hot tub or swimming pool for an extra charge.

Amount of Risk Assumed

With home insurance, it’s meant to safeguard consumers against property damage caused by natural disasters to your personal property and the physical house with some liability coverage measures. The amount of risk assumed is higher in home insurance as compared to home warranty, which makes sense with its higher premiums.

Check out this situational analysis to better understand the difference between a home warranty and home insurance:

  • A leak in a primary water line or the water pipe that requires a plumbing repair can be covered by both policies.
  • While the home warranty covers the repair of the water pipe, home insurance would cover the water damage caused by the leak.
  • A major leak that led to flooding would be covered by your home insurance.

How Homeowners Insurance and Home Warranty Work

01. Home Insurance

Home Insurance Coverage

A home insurance policy provides coverage for any accidental damage due to natural disasters, theft, fire, and other major causes of home devastation. The four areas covered under the home insurance policy include your home’s interior and exterior, the personal property in the event of loss, damage, or theft, and general liability arising when someone is injured on your property.

So, how does home insurance work? For instance, if a water pipe breaks, causing a major flood in your kitchen, you may contact your home insurance company to file a claim. The insurance company will send an insurance adjuster to check your home and assess the validity of your claim. Once your claim is approved, the amount of your deductible will be deducted by the insurance company and will issue you a payment to repair your home. The deductible can help lower your yearly policy premium.

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02. Home Warranty

If you’re worried about not getting protected once the manufacturer’s warranty of your appliances is over, you should consider getting a home warranty. It’s a service contract providing coverage for appliance repair or replacement that fail due to standard wear and tear. As already mentioned, getting a home warranty is discretionary, but it is considered a smart purchase that can save you hundreds and even thousands of money on repairs and replacement.

So, how does a home warranty work? For example, your heating and cooling system stops working. You can contact the home warranty provider to send a licensed technician and assess your HVAC problem. If the professional technician determined that your system is no longer working due to wear and tear and it’s covered under the terms of your home warranty service contract, repair or replacement of your HVAC system will be carried out for just the cost of a service call, and the home warranty company will pay the rest.

Benefits of Home Warranty and Home Insurance

Both home warranties and home insurance have a set of benefits. Homeowners who want to have peace of mind can avail both to ensure that they are fully protected from the expensive cost of general property damages and specific system or appliance issues.

Here are the benefits of home warranties and home insurance:

  • Save Money: A home insurance saves you thousands of money from major property repairs such as roof damage, flood and water damage, and a fire incident. On the other hand, a home warranty can save you from the cost of unexpected home appliance or system breakdown. Here is the best home warranty companies that can actually help you save money on home repair without all the headache and scammy tactics, lets get compare warranties for your home!
  • Save Time and Effort: A home insurance helps you save time and effort in funding a completely wrecked home due to natural disasters, whereas a home warranty saves you from the stress and hassle repairing your appliances or your own or hiring a technician.
  • Peace of Mind: A home insurance gives assurance that you won’t pay a hefty amount of money if your house got severely damaged by fire or natural disaster, whereas a home warranty gives you peace of mind that someone will repair or replace your appliance or system if it wears out.

How to Choose a Home Warranty or Home Insurance Company

When choosing a home warranty or insurance provider, the process is almost the same. In-depth research about the company’s reputation and experience is very important to ensure you get covered as what the agent initially promised.

Here’s how to ensure that you choose the right home warranty or home insurance company for you:

  • Check Reputation: Check the company’s website to know more about their vision and mission, warranty or insurance plans, and services. Read the company’s ‘About Us’ page to know how long the company has been operating, and their humble beginnings or history. It also helps reading their FAQ or Q&A page to better understand their products than merely reading the fine print or terms and conditions.
  • Make Comparisons: Check different home insurance or home warranty companies available in your area. Compare different plans and determine their similarities and differences when it comes to pricing coverage, and benefits, so that you can choose the best one for you.
  • Read Reviews: Seek reviews from current or previous customers by asking your relatives, friends, or neighbours about their experience filing a claim from a prospective home warranty or insurance company. It helps reading social media comments on the company’s fan page to get real feedback from different people across your state or the country.
  • Make a Call: One of the best decision-making factors you have to consider is the company’s customer service. Get the phone number of the company on their website and call their customer service line. Ask questions about their plans and claims process and observe how the person on the other line answers your queries. You want to ensure that you’ll be treated well when you need their help in times of disaster or just leave you waiting in a long queue or get irrelevant answers.
  • Meet the Agent: Conduct a face-to-face interview from the company’s representative to better explain the features and benefits of their plans. Take this opportunity to ask all questions and clarify any doubts or concerns about a home warranty or home insurance. You can ask a few references and previous cases that were awarded compensation in your local area and verify the information. This step helps narrow down your choices and gives you more informed decision-making.


Home warranties and homeowner’s insurance or home insurance are different in many ways. A home insurance plan would safeguard you from major property disasters that would result in a large sum amount of money without it, such as flood damage or roof damage caused by storm, theft, or fire. A home warranty is specific to your home appliances and systems, providing coverage if they become damaged due to normal wear and tear.

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