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Published: Jan 11, 2024 7 min read

Homeownership often involves dealing with unexpected repairs and expenses. A home warranty and home insurance, however, can help you cover those costs.

While they operate in distinct ways and cover different things, together they can provide comprehensive coverage for your home and major appliances and systems.

Our guide below explores the difference between home warranties and home insurance, what they cover, what they exclude and how they can complement each other.

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What is a home warranty?

A home warranty is a service contract that provides coverage for the repair or replacement of major appliances and home systems. This type of warranty can help cover the cost of repairing unexpected breakdowns and malfunctions due to normal wear and tear.

Home warranties typically last for one year and involve a monthly premium, along with a deductible (known as a service fee). You’ll have to pay this fee every time you request a visit from a contractor or technician.

What does a home warranty cover

Most home warranty companies provide coverage for the same types of systems and/or appliances, with variations in their coverage limits and optional add-ons.

Some common items covered by a home warranty plan include:

  • Electrical systems
  • Plumbing systems
  • Air conditioning
  • Heating systems
  • HVAC systems
  • Water heaters
  • Garage door openers
  • Kitchen appliances (refrigerators, trash compactors, dishwashers)
  • Laundry appliances (washers and dryers)

Home warranty companies also offer optional coverage for items such as septic systems, pools, spas, among others.

What does a home warranty not cover

Home warranties generally don’t cover appliances with pre-existing conditions or under manufacturer’s warranty. They may also exclude coverage for malfunctions due to improper installations, lack of maintenance or damages caused by animals.

In addition, home warranty contracts come with coverage limitations and exclusions that vary depending on the company. For instance, companies may exclude specific parts, mechanical systems or components, such as knobs, smart gadgets, handles, and fixtures.

For more information about home warranty coverage check out our guide on What Does a Home Warranty Cover?

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What is homeowners insurance?

Homeowners insurance is a type of property insurance that pays for the repair or replacement of your home or personal belongings if they’re damaged as a result of an incident covered by the policy. These incidents (also called perils) typically include fire, theft, vandalism, explosions, civil unrest and certain natural disasters like windstorms, hail, volcano eruptions and lightning.

A home insurance policy can also include liability protection, which provides financial compensation if someone has an accident or injury in your property.

What does homeowners insurance cover?

While coverage can vary depending on the policy and insurance provider, home insurance policies generally cover the following:

  • Dwelling coverage: refers to the structure of the property, including walls, floors, roof and other structural components attached to it. It also covers additional structures within your premises, such as sheds, detached garages, fences and gazebos.
  • Personal property coverage: personal belonging inside or within your dwelling, such as furniture, clothing, kitchenware and electronics. It can also cover items from people visiting your home if they suffer some type of damage while in your home.
  • Liability coverage: covers legal fees or medical expenses for others if you’re responsible for causing bodily injury or property damage.
  • Additional living expenses: may cover temporary housing, meals and other necessary living expenses if your home becomes uninhabitable.

What does homeowners insurance not cover

Homeowners insurance doesn’t cover flooding or earthquakes — these require additional insurance coverage or a separate policy.

An homeowners insurance policy also excludes the following perils and events:

  • Neglect
  • Damage from normal wear and tear
  • Lack of maintenance
  • Power failure
  • War
  • Nuclear hazard
  • Intentional damage caused by you
  • Government action
  • Loss of property caused by bad zoning or faulty construction

Home warranty vs. Home insurance

Home insurance and a home warranty cover different aspects of homeownership. Simply put, home insurance covers the cost of damages to your home’s structure or personal belongings, whereas a home warranty covers the costs of repairing or replacing home systems and appliances.

Here’s a side-by-side comparison between home warranty and home insurance.

Home Warranty
Home Insurance

A home warranty covers home systems, such as wiring, plumbing and HVAC, and appliances like washers, dryers and refrigerators.

Home insurance covers your home’s structure, personal property or liability expenses.

Pays for repairs or replacement costs when a covered item malfunctions due to normal wear and tear.

Pays for the replacement or repair of your home and/or belongings if they’re damaged by fires, theft and natural disasters, among other perils.

Home warranty costs vary from company to company, and depending on your location and property size.

Annual premiums depend on the provider, as well as home value, location and type of coverage, among other factors.

Involves service call fee, ranging from $60 to $150 per repair visit

Features deductibles for claims (typically $500 to $1,000), which you must pay before insurance covers the rest.

Home warranty coverage is optional, homeowners may choose to purchase it at any time.

Home insurance is often required by mortgage lenders.

More about home warranty and home insurance

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Home warranty vs. Home insurance FAQs

Does home warranty cover plumbing?

Yes, home warranties typically include coverage for plumbing systems, including stoppages and fixtures.

Is a home warranty required?

A home warranty is not required, unlike homeowner’s insurance, which many mortgage lenders do require. However, it can provide additional coverage for items that are generally excluded from home insurance.

When to use a home warranty company

A home warranty policy can cover the cost of repairing unexpected breakdowns of major home systems and appliances. Once you purchase a home warranty plan, you can submit a claim whenever a covered system or appliance breaks down. The company will then send a technician to make a diagnostic and determine whether coverage applies.

What is the difference between home insurance and home warranty?

Home warranty and home insurance policies serve different purposes. Homeowners insurance primarily covers structural damages to your home and personal belongings caused by a covered event such as natural disasters, theft, fire or vandalism. A home warranty, on the other hand, isn’t a type of insurance, rather a service contract that covers the repair or replacement of home appliances and systems when they fail due to normal wear and tear.

Summary of Money’s Home Warranty vs. Home Insurance

  • A home warranty is a service contract that provides coverage for major home systems and appliances, and can help pay for their repair or replacement when they fail due to normal wear and tear.
  • Home warranties cover appliances like refrigerators, trash compactors, dishwashers, dryers and washers, and systems such as internal wiring, plumbing, garage door openers and HVAC systems.
  • Home insurance is a type of coverage that helps pay for costs if your home or personal property is damaged due to certain perils, such as fire, windstorms, theft and vandalism.
  • Home insurance covers damages to the structure of your home including walls and roofs, and personal belongings, such as furniture, clothing and electronics.
  • Home insurance can also include liability coverage, which can help cover legal fees and medical expenses if someone suffers an injury while in your property.
  • Home warranty is completely optional, whereas home insurance is generally required by lenders when you take out a mortgage.
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