Home insurance and home warranties both help protect homeowners from unexpected expenses, but they serve very different purposes. Learn what each one covers and how they differ.
What Is Homeowners Insurance?
Homeowners insurance is an insurance policy designed to provide financial protection when your home or belongings are damaged or lost because of a covered event. Depending on the policy, coverage can include the home’s structure, personal property, liability, and additional living expenses.
Covered events may include certain fires, storms, theft, vandalism, and other risks specifically listed in the policy. Homeowners insurance typically involves a deductible, which is the amount you are responsible for paying before the insurer contributes toward a covered claim.
What Is a Home Warranty?
A home warranty is generally a service contract rather than an insurance policy. It can help pay for the repair or replacement of certain household systems and appliances when they stop working because of normal use, depending on the terms of the contract.
1. Home Systems
Depending on the plan, a home warranty may cover systems such as heating and cooling equipment, plumbing, electrical systems, or water heaters. Coverage varies between providers and contracts.
2. Household Appliances
Some warranty plans cover appliances such as refrigerators, ovens, dishwashers, washing machines, and dryers when they experience covered breakdowns. Service fees and coverage limits may apply.
Home Insurance vs. Home Warranty: What Do They Cover?
The easiest way to understand the difference is to look at the type of problem each product is designed to address. The exact coverage always depends on the policy or contract.
May cover damage from covered events such as fire, certain storms, theft, or vandalism, along with other policy protections.
May cover repairs or replacement of specified appliances and home systems when they fail under the terms of the contract.
They Are Not the Same Type of Protection
Home insurance and home warranties address different situations. Insurance focuses on covered losses and risks, while a home warranty generally focuses on specified systems and appliances that experience covered breakdowns. In some cases, homeowners may have both because the products serve different purposes.
Understanding Which Coverage Applies
Before submitting a claim or requesting a repair, review the relevant policy or service contract. Check the covered causes, eligible items, deductibles or service fees, coverage limits, exclusions, and any maintenance requirements. These details determine how each type of protection may apply.