Home Warranty vs Home Insurance

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Updated March 14, 2023

Homeownership is often one of the most rewarding journeys. But without the best insurance, it can be a huge source of anxiety. However, when selecting the right insurance and warranties, homeowners are often confused by the flurry of contract agreements. Below we’ll compare home warranty vs home insurance.


  • Home warranty providers cover accidental damages and normal wear and tear for major appliances and key systems within a house, like stoves, refrigerators, HVAC units, and plumbing.
  • Home warranties greatly reduce the cost of repairs but charge a service fee every time a claim is filed.
  • Homeowners with warranties may file claims with providers whenever a system/appliance fails; the warranty company will contact a service team to come and repair the damages.
  • Homeowners insurance protects structures and personal property against unexpected environmental damages, theft, and burglaries.
  • The cost of homeowners insurance is reevaluated every year as risk is assessed; then, premiums are adjusted.

A home warranty services the key appliances and systems within a house, usually under a one-year renewable policy. On the other hand, insurance covers the house from environmental disasters, fires, or burglary (incidents called “known perils”).

Insider Tip

Always check whether the insurance company offers repayment at replacement cost or cash value, as every policy looks different.

Differences Between Home Warranty vs Home Insurance

Understanding insurance vs warranties can be tricky, especially when dealing with homes. Because unlike insurance for an iPhone or an electronics warranty, covering a home involves the building itself and many of the appliances and systems within it.

Most importantly, home warranties and home insurance aren’t synonymous. Yes, they’re both ways to mitigate the risk of loss and damage, but that’s where it ends. Warranties cover a home’s appliances from accidental damages or general wear & tear. A warranty is more or less for expected issues, while insurance covers a house in the event of unexpected damages.

It’s also important to know that there are different insurances for homeowners. There are typical homeowners insurance policies, and there are also plans like Liberty Mutual’s landlord insurance, which is specifically geared toward rental properties.

Additionally, home insurance offers policies, like “Other Structure Coverage,” that apply to damages of add-ons or separate buildings on your property. This coverage protects things like garages, sheds, and barns from any specified perils. Here, homeowners can expand their contracts to include things like lawnmower insurance.

Likewise, there is an additional type of coverage called “Liability Insurance,” which covers medical expenses for someone else who gets hurt while on your property.

Both types of agreements also come with varying contract periods. Warranties tend to last for a year and require renewal. Upon expiring, the homeowner can reenter a contract, but the age and state of their equipment might cause the price to go up.

Similar to warranties, insurance plans are also renewed annually. During these renewals, the insurance company will reevaluate the house’s condition and any other essential factors and adjust the premiums.

Appliances & Systems

Home warranties should be considered an umbrella policy covering appliances, systems, or both.

As far as appliances go, warranty coverage protects various items, including:

  • Dishwashers
  • Refrigerators
  • Stoves/Oven Ranges
  • Washer/Dryers

Likewise, a home warranty plan also covers various home systems, including:

  • HVAC
  • Water Heaters
  • Electrical Systems
  • Plumbing
  • Heating Systems/Furnaces

Lastly, homeowners can add septic systems and sub-pumps for an added fee.

Ultimately, purchasing homeowners’ warranties is not recommended for those with new appliances, as they’re likely still covered by the manufacturer. However, you may be better off buying a warranty if you have many older machines/systems and prefer to avoid finding your repair services.

Unexpected Damages

As stated earlier, homeowners insurance covers major disasters and unexpected damages. The cost and scope of insurance policies always depend on where you live. For example, those living in the American Midwest don’t have to worry about purchasing hurricane insurance but may have to include tornado insurance.

In addition to weather damage, homeowners’ insurance can provide coverage against fires, theft, vandalism, or crashed trees.


Many home warranties set cost limits on the amount they will cover for a single repair. For example, there might be a $1,000 limit on a washer/dryer repair, meaning that the homeowner will have to pay the excess amount if it goes beyond that limit.

There are multiple types of homeowners insurance. If you see a plan as “All Risk,” this means it’s comprehensive coverage (although you should always read the fine print). Then, there are “named perils” plans which include a list of specific incidents and only provide coverage under those conditions.

Ultimately, named perils coverage costs less than an all-risk but leaves homeowners with a more significant potential for loss.

STAT: Above 95% of U.S. homeowners have a home insurance policy. (source)

Home Warranty vs Home Insurance FAQs

Is home insurance mandatory?

This depends on the bank you purchase your home from. Most banks require owners to buy home insurance when taking out a mortgage. However, if you have paid off your house, you don’t have to continue paying for insurance, although it’s recommended.

Can you transfer home warranties and insurance to the next buyer?

Warranties come with the option to transfer over to the next homeowner. However, you cannot do this with insurance.

Do home warranties and insurance have any redundancy?

For the most part, warranty, and insurance coverages cover completely different entities and do not overlap.
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