Home Warranty vs. Home Insurance

 It’s a common mistake to confuse home warranty with home insurance. However, it’s important to note the differences to prevent any future problems with filing for claims.

Homeowners Insurance

There is a lot that could go wrong with owning a home. Natural or man-made disasters can cause catastrophic damage. A homeowners insurance plan aims to protect against that. When you finance a home, homeowners insurance is often mandatory.


Generally, it will cover events that you can’t control such as tornadoes, hurricanes, freezes, fires, floods, and theft. It will protect both the physical structure of your home and the belongings inside it. According to the Federal Reserve Bureau, homeowners insurance ranges from $300 to $1000 yearly on average. If something happens to your home and it gets severely damaged, the insurance company will provide a payout.


You have to file a claim with your home insurance company when something goes wrong, just as you would with your home warranty company.

The standard procedure for filing an insurance claim is having an adjuster come to the home to assess the situation and determine how much the insurance company will pay depending on the damage. Once the claim is approved, the deductible needs to be paid. The insurance company issues payment for the rest of the damage. Lower annual premiums generally mean you’ll have a higher deductible.

Another benefit of homeowners insurance is that it can protect from lawsuits. If someone injures themselves on your property and decides to sue you, your home insurance company may cover it.

Homeowners must research what is and what isn’t covered, because home insurance plans can have major differences. Sometimes upgrading parts of your home, for example, adding security systems, shutters, better locks, and smoke detectors could reduce the price of the plan.

If a home is severely damaged to the point where it can’t be used, it may or may not be completely covered by your plan, so researching the coverage is absolutely crucial. When a house is sold, home insurance is not usually transferrable.

Homeowners insurance usually covers:

  • Theft and vandalism
  • Tornadoes, hurricanes, or earthquakes
  • Floods, fires, windstorms, lightning, hail, or falling objects like a tree
  • Personal property
  • Liability claims from third-party injuries that take place on your property
  • Living expenses if your home is deemed uninhabitable

Home Warranty

A home warranty plan will protect you against breaks on home systems and appliances like refrigerators, washing machines, and dryers, ovens, air conditioning, heating, and plumbing. In the case of a break, the item will either be repaired or replaced by the warranty company, in accordance with the terms and conditions. They are generally transferrable.

When you need to file a claim for a home warranty, simply contact the company and they will arrange for a licensed, pre-screened technician to come to your home and assess the situation. If the issue is due to normal wear and tear, then the appliance will be repaired or replaced.

Home warranties typically cover major appliances and systems like:

  • Central air conditioning and home heating
  • Interior electrical system
  • Plumbing system
  • Water heater
  • Range/Oven/Cooktop
  • Refrigerator
  • Dishwasher
  • Washer and Dryer
  • Garage door opener
  • Ceiling fans

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