Difference Between Home Insurance And Home Warranties

The Difference Between Home Insurance And Home Warranties

Do you know the difference between home insurance and home warranties and what they cover? Both secure a home and a homeowner’s wallet from expensive repairs.

Do you need both house insurance and a home warranty, or can you acquire just one? Many homeowners ask all of these questions.

A home warranty and homeowners insurance share a lot of similarities. You pay a monthly fee and a service charge (often referred to as a deductible in the insurance industry) for both policies. What they cover is the significant difference between home insurance and home warranties.

Also read: What Type of Life Insurance Generates Immediate Cash Value

Many homeowners erroneously believe their homeowner’s insurance will cover unexpected expenses and liabilities.

In reality, it’s reserved for occurrences like a fire, or a natural disaster, which are referred to as dangers in the insurance industry.

Let’s examine the difference between home insurance and home warranties.

What is Home Insurance?

Home insurance is a legally required policy that guards your belongings, home structures, and liability against damage from a covered peril.

Home insurance and home warranties

However, house insurance does not cover everything, so you are responsible for mending any damage to your appliances that results from aging. In such cases, a house warranty policy can be helpful too.

What is Home Warranty? 

A home warranty is a service contract that covers the replacement or repair of major systems and appliance parts that deteriorate over time and through normal wear and tear.

For example, a home warranty plan might include a warranty on some components of your washer, dryer, and kitchen equipment, as well as effective home systems like the electrical, mechanical, and plumbing systems.

Home warranty includes repairing them in case they break and often covers replacement costs if they cannot be repaired. Additionally, you can protect more effective systems, like your spa and pool.

Is Warranty The Same As Insurance?

A warranty is a contract between a manufacturer and the buyer that the product they have purchased from them will be free from defects in the workmanship and materials or that it will be replaced within a specific period.

Most manufacturers provide a one-year warranty, though this varies by jurisdiction. Usually, new goods are sold with the implied warranty that they will perform as advertised.

Insurance is an optional form of coverage on a product that is usually sold along with the product at the time of purchase. Protection from financial loss is provided by insurance.

It is a type of risk management that is mainly used to hedge against the risk of a potential, unforeseen loss. A person or organization that offers insurance is referred to as an insurer or insurance company. A policyholder or insured is a person or organization that purchases insurance.

In an insurance transaction, the insured agrees to pay the insurer a guaranteed and known, relatively small loss in exchange for the insurer’s agreement to reimburse the insured in the case of a covered loss. The loss may or may not be monetary.

Still, it must be quantifiable in monetary terms and pertain to something in which the insured has an insurance cover established by possession, ownership, or a preexisting relationship.

What is the Difference Between Home Insurance and Home Warranties?

Although they both assist homeowners in covering the cost of house repair, there is a difference between home insurance and home warranties. Homeowner insurance offers financial assistance coverage when homes incur damage from natural disasters like lightning or fire. Additionally covered by homeowner’s insurance are any lost items due to theft and medical expenses for injuries you or a visitor sustained while in the home.

A home warranty covers things like your stove,  refrigerator, and microwave. If any of these things require maintenance or replacement, your home warranty will cover them following your plan. Home warranty coverage can reduce the cost of repairing or replacing expensive goods for which you may not have budgeted or saved money.

Because the insurer is taking on additional risk, homeowners insurance premiums usually cost more. The National House Service Contract Association claims that home warranty coverage varies, but there are some typical coverages for systems and appliances you may expect from most home warranty organizations.

Do Home Warranties Cover Existing Problems?

Customers of home warranty providers may find this question challenging, but the appropriate answer will depend on the situation and the particular home warranty provider.

An appliance or system failing or failing before the start date of coverage is an existing condition in the context of a home warranty. The day of closing or the day the home warranty is purchased, depending on whether the homeowner is purchasing a warranty on a home they have already purchased, usually is when coverage starts. A system or appliance may not have received the necessary maintenance, which may cause the existing problem.

The contract with the home warranty company will determine whether or not the existing problems are covered. 

Do Home Warranties Actually Cover Anything?

A home warranty covers the mechanical damage of numerous home equipment and appliances. A home warranty can also make it easier to find the correct contractor or maintenance specialist if any appliances or equipment need to be replaced or repaired.

Below are the kinds of items that a home warranty can cover:

  • Home Systems: A home warranty can also cover all the maintenance operations that keep one’s home in good condition. Your plumbing, electrical, and HVAC infrastructure are all protected. Repairs for even leaking roofs may be covered.
  • Home appliances: Generally, a home warranty covers yard and outdoor appliances, the kitchen, laundry, and other appliances. A house warranty can cover anything, from your microwave and stove to your garage door opener and pool. A home warranty may also cover sprinkler systems, sump pumps, pools, spas, and other items.


What is the duration of a home warranty?

Home warranties are renewed annually and last for one year. In some cases, a house warranty can continue to be in effect for over a year without needing to be renewed.

Who should pay for a home warranty?

The homeowner usually pays home warranty fees. There are instances where a house seller would cover the price of the buyer’s home warranty plan and give them a choice to renew it when it expires.

Does home insurance cover damage from water or mold?

Most home insurance policies cover unforeseen and accidental water damage like an overflowing toilet, a busted pipe, or a damaged washer hose. Usually, insurance doesn’t cover damages caused by slow leaks, but a damaged item would be covered if mold grows. Home insurance coverage does not cover floods; thus, mold caused by a flood would not be covered. In other words, separate flood insurance coverage would be needed.

If my house and other belongings are destroyed, would insurance completely replace them?

Sometimes, you and your insurance provider will decide how much insurance you should purchase. Whatever damages you have, the policy will cover them up to that amount. Every year, you should examine your insurance to ensure you have enough coverage for your home and other belongings.


It is advised to inquire from a house seller if the house you bought is currently insured.

Enrolling in a house warranty and a home insurance policy is a good idea. However, home insurance does not cover minor problems like a broken hot water heater.

Only significant damage will be covered. If you don’t have the money to handle unforeseen problems, a home warranty supplements the gaps left by home insurance and helps you keep ahead of your home’s expenses.

Choose a plan that works for you and your budget by contacting the home warranty and insurance provider.

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