Home Warranty vs Home Insurance 2023: What’s the difference?

Owning a home is one of the most significant expenditures you’ll ever make. It’s not simply prudent to safeguard your possessions; it’s also necessary. Getting a homeowner’s insurance coverage and a home warranty plan is the best method to do this.

These are two main coverage types available to help protect your home and its contents. With these two, you can cover your home, valuables, appliances, and system components when necessary.

You can purchase both without overlapping coverage between the two. However, before you can purchase them, it is important to understand how each one works so that you have the protection needed should anything arise with your home.

In this article, we’ll look at the differences between a home warranty and homeowner insurance, as well as why both are necessary.

What Is a Home Warranty?

Consider a house warranty in the same way you would a warranty on a new automobile or technological equipment.

It’s a policy that pays for the service, repair, and/or replacement of specific systems in your house if they break down suddenly because of a manufacturer’s defect, wear, and tear, or any other problem.

Warranties are completely voluntary and usually cover your home’s major systems and appliances.

They are for a set period, and payment can be made annually, monthly, or all at once.

Depending on what you want to be covered and how much you’re ready to spend, the price can vary dramatically. The more comprehensive the warranty, the greater the cost.

Some home warranties cover the entire house, while others simply cover individual systems.

If you want coverage for septic tanks and sump pumps, as well as more specialized appliances, you’ll likely need more coverage or a larger plan.

Sellers occasionally offer warranties as incentives to potential purchasers throughout the course of a real estate transaction since the existence of a warranty provides peace of mind to the buyer, who may be anxious about things breaking or failing as soon as they move in.

Homeowners can also purchase one on their own for the same reason, either when they first purchase the house or later.

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What is the definition of homeowner’s insurance?

Homeowner’s insurance is a policy that protects you and your personal items financially. It gives you protection in the case of a disaster beyond your control, such as a fire, a hurricane, or a bodily injury accident on your property.

When you file a claim, you pay a monthly fee for the coverage and a predetermined deductible, similar to a vehicle insurance policy.

Basically, the cost of your homeowner’s insurance coverage will vary. It will depend on factors like the home’s location, square footage, age, and whether or not it has safety measures such as an alarm system or security cameras.

Though some individuals confuse house warranties with homeowner’s insurance, the two are actually quite different.

Normally, the purchase of a homeowner’s insurance coverage is not required by law. Homeowner’s insurance, on the other hand, is something practically every homeowner should factor into their budget because you can’t acquire (or keep) a mortgage without it.

Because the mortgage no longer exists, the requirement is dropped when your home is paid off, but most homeowners keep their coverage because paying off your mortgage does not free you of home-related dangers.

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What is the Difference Between Home Warranty and homeowner’s insurance?

In looking at the difference, we’ll consider how they differ in mode of operation, cost, and so on.

Let’s start!

Operational Mode: Home Warranty vs. Homeowner Insurance

How Does Home Warranty Work?

Even the best home warranty is useless if you never use it, so if something in your house breaks down, contact your warranty company as soon as possible to discuss the issue and confirm coverage.

If the repair is covered, one of the company’s partners professionals will come to your home and do the repairs.

Be aware that your pre-paid fees might not be your only out-of-pocket cost. Some businesses charge service fees in addition to the monthly or yearly subscription fees.

Check out: How To Get Cheap Car Insurance In 2023

How Does Homeowner’s Insurance Work?

Homeowner’s insurance has nothing to do with the people who sold you the house, and it won’t cover the cost of a dishwasher that breaks down at any time.

You may never need to use it because it exists to protect you from financial ruin following a disaster.

If this is the case, the first thing you should do is contact your insurance provider and register a claim.

Then, an adjuster will look into the claim to see if it’s covered by your policy and, if it is, what your financial obligations are.

Payment will be made by cheque (or direct deposit), and you can use the funds as you want to complete the repair.

You can hire a contractor of your choice, do it yourself, or keep the money and let the damage accumulate. It’s entirely up to you.

The following are some scenarios that may lead to the filing of a homeowner’s insurance claim:

  • Your home has been struck by a falling tree.
  • Weather-related damages
  • Theft and vandalism
  • Water damage
  • Smoke and fire damage
  • It’s important to note that these are all specific events that lead to home damage, not descriptions of the harm itself.

Cost: Home Warranty vs Homeowner’s Insurance

What Does Homeowners Insurance Cost?

A home insurance coverage is one of the important bank requirements if you’re asking for a mortgage on a home.

The average annual cost of Homeowner’ insurance is $1,312, which is requires an annual renewal.

However, each home insurance policy has a deductible, which they must pay before the company grants you your claim. Note, with this policy, any excess charges will be covered.

What Does a Home Warranty Cost?

Home warranties normally have a 12-month contract period and are not required to acquire a mortgage, unlike homeowners insurance.

A home service plan is an optional purchase that usually occurs after you have acquired a home, but it is a wise one.

Home service plans are available for a modest monthly fee, with add-on coverage for items such as roof leak repair and pools and spas available for a fee.

You should read: How To Get Cheap Car Insurance In 2023

If I have homeowner’s insurance, should I get a home warranty?

Because homeowner’s insurance and home warranties do not provide the same level of protection, you can decide to purchase a home warranty should be made independently of the availability of homeowner’s insurance.

While homeowner’s insurance is almost a must, a home warranty is completely optional.

Do you require one? That is debatable. Take advantage of a home warranty if you’re buying a house with one.

If not, it all depends on how comfortable you are with the terms of the home warranty contract.

A home warranty may not be right for you if you want to choose your own appliance repair specialist.

It can be worth the money if you’re too busy to find someone on your own.

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What is the best place to gain a Homeowner’s Warranty?

Begin by seeking referrals from friends and family to learn more about your home warranty alternatives.

You can have a fair notion of what to expect from a home warranty provider based on personal experience.

Your realtor may be able to recommend a company if you are a new homeowner.

Finally, ask your neighbors for recommendations on home warranties. They may be able to refer you to a company that they are satisfied with.

Make a list of the appliances and systems you want to safeguard before you shop around utilizing the recommendations and referrals you’ve gathered.

Make a note of any specific appliances or systems you have, such as a pool or wine chiller, to ensure your home warranty will cover them.

Get quotations from at least a few home warranty businesses that have a strong reputation.

Choose the guarantee that will protect most appliances/systems from the most common causes of failure for the least amount of money. Don’t forget to include service fees in your calculations.

You should see: Classic Car Insurance 2023: What Is It? And How Does It Work?

Home Warranty vs Homeowner’s Insurance Frequent Asked Questions

Is it possible for me to have both a house warranty and home insurance?

Yes, it is. Having both can put your mind at ease, especially if you’re a first-time homeowner concerned about the costs of homeownership.

Is homeowner’s insurance a Good Investment?

Yes, of course. While a homeowner’s insurance coverage may appear to be an expensive investment, it may help you keep your quality of life in the event of a variety of disasters.

What is homeowners warranty insurance, and how does it work?

The term “homeowners warranty insurance” can be confusing because it refers to two separate types of home insurance.
Homeowner’s insurance is not the same as home warranty protection. Home warranties are service contracts, whereas the former is an insurance policy.

Final Thoughts

When a major household system or appliance fails, home warranties can help cover the costs. Home insurance, on the other hand, protects your house and valuables from theft and other risks, as well as provides personal liability coverage.

Your lender may require home insurance coverage if you have a mortgage. Of course, even if it isn’t needed, protecting your investment with solid insurance coverage makes financial sense.

While house warranties are an optional supplementary layer of security, they can bring further peace of mind.

They may be the best option if your appliances and systems have outlived their usual warranties, are in danger of breaking down or would be excessively expensive to replace.

Carefully review before purchasing a house warranty or a home insurance policy so you know exactly what it will—and will not—cover.


  • ahs.com– what is the difference between home owners insurance vs. home warranty
  • forbes.com– home owners insurance vs. home warranty
  • investopedia.com– home owners insurance vs. home warranty


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