What's the Difference Between Homeowners Insurance and a Home Warranty?

Make sure you have the coverage you need

With all the showings, contracts and jargon that come with buying a home, there's a lot to process. Not surprisingly, people often confuse the home warranty with a home insurance policy.

Both are similar in that they are designed to protect you when something goes wrong in your home. But a home warranty has key differences from home insurance. Take time to understand how each one works; the two cover different sets of circumstances, and combining both can potentially bring savings of thousands of dollars in the long run!

Difference between homeowners insurance and a home warranty

What does homeowners insurance cover?

Homeowners insurance pays for damage and loss caused by outside forces such as fire and weather — or even vandalism committed by a burglar. If any of these events damage or destroy a portion of your home, insurance would help you rebuild and replace your lost and damaged belongings. For example, if a tree falls and crashes into your kitchen, your homeowners policy would help you replace your damaged appliances. But if your oven range quits working, repair and replacement would not be covered through a home insurance policy.

What protection does a home warranty offer?

A home warranty covers the cost of breakage caused by everyday wear and tear or from old age. In addition to many kinds of home appliances, such as washers, dryers and oven ranges, coverage also extends to the home's mechanical systems, such as the furnace and hot water heater. Some policies cover air conditioning and plumbing. So if your dishwasher breaks down, the costs of repair, parts and replacement would be paid for by a home warranty.

While individual appliances may initially be covered under a manufacturer's warranty, this only lasts a finite period of time. A home warranty provides protection regardless of the age of the appliance or system.

Watch our video for an easy-to-understand overview of the difference between homeowners insurance and a home warranty, the types of coverage and protection each offers.


Are homeowners required to buy these coverages?

Typically, lenders require a minimum amount of homeowners insurance as a condition to issuing the mortgage. From the bank's perspective, insurance reduces the risk of the lender defaulting on the loan because payments are more likely to stay affordable even in the face of damage. Carrying homeowners insurance is optional once your home is paid off, though still advisable. Why expose your biggest investment to risk?

A home warranty is optional. A big benefit to a home warranty is that it can be transferred from one owner to the next. If you're selling a home and want to bring that extra incentive to the table — especially if your appliances are old — you can purchase a home warranty. Buyers, too, can request that the seller offer a home warranty as a condition of sale, or purchase a policy themselves. Either way, it makes the process of moving and settling in much easier on the mind — and wallet.

Read the fine print

Each policy is different, so take time to understand what's covered and what isn't. That way, when something unexpectedly breaks or gets damaged in your new home — and it does happen — you'll know what to expect. For example, your home insurance policy may cover wind damage, but if that same storm system floods your basement, you won't be covered unless you purchase a separate policy. Also, some home warranty policies don't cover everything. As with a home insurance policy, if breakage is caused by neglect or abuse, you may not be covered. Take time to educate yourself so you'll be prepared for any curve ball life sends your way!

This material has been prepared for informational purposes only; it's not intended to be relied on as the only source of consideration for a home warranty or insurance product purchase.

HWA Has You Covered

A home warranty from HWA protects your budget and your peace of mind against the unexpected expenses of inevitable home repairs. Whether you're buying, selling, or already in your home, we have a plan to fit your needs!

View Plans