Differences between Homeowners Insurance and Home Warranty

Buying and owning a home is one among the greatest outlays in the life of an individual. Protecting the assets is not only smart, but it is also a necessity. The best way to accomplish this is to buy both a home warranty and a homeowner’s insurance policy. Buying both will cover a home, possessions, system and appliance components in case they require repair or replacement. However, understanding the dissimilarities of the two products and the reason to buy them can be tricky. While both are immense protections to have, home warranties and homeowners insurance offer different kinds of protection. Here are the major differences between these two effective home protection products that may assist you to choose the most suitable one according to your needs and budget.

Basic differences between the two products

While a home warranty is a service agreement that covers major systems and appliances in a home, a homeowners insurance policy protects a home against natural calamities and disasters.

Home warranty is an ideal option for those having old home systems and appliances, whereas homeowners insurance is required while buying a home with a mortgage loan.

Home warranty covers appliance repairs, electrical problems and plumbing problems, whereas homeowners insurance covers structure of a home, individual possessions and it offers liability protection.

Things covered by a home warranty may differ by plans and service providers, but it usually includes almost all the appliances and systems working in a home. On the other hand, a homeowners insurance policy varies according to the state of residence of the policy holder and the type of policy, but usually a policy will offer coverage to any item that is associated with the home.

While the home warranty is transferable to a new homeowner, a homeowners insurance policy cannot be transferred to the new home buyer.

While the home warranty is loosely regulated, homeowners insurance is controlled by state authorities.


Both products vary in benefits, as well.

Home warranty is a beneficial product for home owners, home buyers and home sellers. For homeowners, it assists them to place a claim and to get their appliances and systems repaired easily, save up huge repair expenses, and to get as many covered appliances and systems repaired.

For home buyers, home warranty offers the required coverage to the incorporated appliances and major systems, and protects their cash flow and offers access to a system of competent service technicians at their fingertips

For home sellers, the home warranty assists them sell their home faster and at higher price, protects them from after-sale lawful disputes and boosts the marketability of their home.

When comes to home insurance, a policy offers the necessary coverage to a tentative event , such as theft, fire, vandalism, the cost of damages, or to certain natural calamities. It also offers coverage to the personal items of policy holders and offers them the liability protection. A liability insurance policy will protect a member from court cases in the event that somebody is wounded on their property. Some of the other benefits of homeowners insurance include:

  • It covers unintentional damages to the exteriors and interiors of the policy holder.
  • Easy to renovate the policy if the premium is paid promptly.
  • It offers coverage to all covered belongings, both old and new.
  • It guarantees serenity and offers the policy holder a feeling of security and safety.
  • It compensates for loss and slight damages, such as a broken window or glass.


The cost of a standard home warranty ranges from $300 to $500 per year, which offers the coverage for the cost of replacing and repairing of major broken down systems and appliances in a home. Home sellers usually pick up the tab for the initial year of coverage, and for spas, pools and dryers and washers, they can extend their coverage plans by paying an extra cost.

On the other hand, the cost of a standard homeowners insurance policy ranges from $300 to $1,000. However, the cost of homeowners insurance differs from state to state and it counts on the amount of coverage and the place of the property.

Final Thoughts

Homeowners insurance and home warranty are corresponding to each other. Homeowners can choose to defend everything they own, except they can afford to. Conversely, homeowners insurance is more expensive than home warranty, but both products have their own pros and cons. Therefore, before buying any of these products, it is better to know their advantages and disadvantages. This would assist homeowners to choose the correct product that best suits their protection needs and their budget.

Jessica Fuller
Meet the author

Jessica is a home warranty expert with a passion for writing. She has a Master's Degree in Business from Oklahoma University.

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