Home Warranty vs Homeowners Insurance: What’s the Difference? (2024)

“Warranty” and “insurance” are both words that encompass some form of protection for people who purchase them. However, when it comes to protection for your home, these two words are very different. Every homeowner needs to understand the differences between home warranties and home insurance for many reasons.

Home Warranty of America works with homeowners around the United States, and we make sure to explain the differences between these two layers of protection. We’re going to provide some brief examples below of what “home warranty vs. insurance” really means in day-to-day life.

What Does Homeowners Insurance Cover?

Homeowners insurance pays for damage and loss caused by outside forces such as fire and weather — or even vandalism committed by a burglar. If any of these events damage or destroy a portion of your home, insurance would help you rebuild and replace your lost and damaged belongings.

For example, if a tree falls and crashes into your kitchen, your homeowner’s policy would help you replace your damaged appliances. However, if your oven range quits working, repair and replacement would not be covered through a home insurance policy.

What Protection Does a Home Warranty Offer?

A home warranty covers the cost of repairs and replacements of certain appliances and systems in your home caused by everyday wear and tear, or from old age. Examples of appliances and systems that may be covered in a home warranty plan include:

• Washers
• Dryers
• Oven ranges
• Furnace
• Hot water heater

There are other parts of the home that a home warranty covers, but every specific plan is a bit different. The bottom-line difference with regards to warranty vs. insurance is that insurance covers unexpected events that lead to damage, while warranties cover events that are somewhat expected, such as the aging and ultimate breakdown of appliances and systems.

While individual appliances may initially be covered under manufacturers’ warranties, these only last a predetermined period of time. Home warranties provide protection regardless of the age of the appliance or system.

Watch our video for an easy-to-understand overview of the issue of home warranty vs. home insurance that specifically delves into the types of coverage and protection each offers.

Are Homeowners Required to Buy These Coverages?

Typically, lenders require a minimum amount of homeowners insurance as a condition of issuing the mortgage. From the bank's perspective, insurance reduces the risk of the lender defaulting on the loan because payments are more likely to stay affordable even in the face of damage. Overall, in many instances, homeowners insurance is required.

A home warranty is optional. A benefit to a home warranty is that it can be transferred from one owner to the next, unlike insurance. If you're selling a home and want to bring that extra incentive to the table — especially if your appliances are old — you can purchase a home warranty. Buyers, too, can request that the seller offer a home warranty as a condition of sale, or purchase a policy themselves. Either way, it makes the process of moving and settling in much easier on the mind — and wallet.

Read the Fine Print

Every insurance policy is different, so take the time to understand what's covered and what isn't. When something unexpectedly breaks or gets damaged in your new home, you'll know what to expect. For example, your home insurance policy may cover wind damage, but if that same storm system floods your basem*nt, you may not be covered unless you purchase separate coverage.

It’s important to note that some home warranties don't cover everything. As with a home insurance policy, if breakage is caused by neglect or abuse, you may not be covered. Take time to educate yourself so you'll be prepared for any curve ball life sends your way!

Overall, the differences between home warranty coverage vs. Insurance coverage are important, but each provides homeowners benefits. If you’d like to learn more about how Home Warranty of America protects homeowners and how we work with them, look at our Home Warranty reviews. Feel free to contact us at 888-492-7359 or contact us online at any time.