Home Warranty vs. Home Insurance: What’s the Difference?

Have you ever wondered what would happen if your home appliances or systems broke down suddenly? Who would cover the costs of repairs or replacements? A home warranty and home insurance are two types of protection that can help you in such situations. But what’s the difference between the two?

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“Note that a home warranty plan is not the same thing as homeowners insurance, although the two are often confused,” says a representative of Cinch Home Services, one of the best home warranty companies in Ohio. Home insurance typically covers damages to the structure of your home, personal belongings, and liability for injuries. A home warranty, on the other hand, covers repairs and replacements of home appliances and systems due to normal wear and tear. Below, we’ll explore the key differences between home warranties and home insurance to help you understand which one’s right for you.

Home Warranty vs. Home Insurance: What's the Difference?


Home insurance provides coverage for the home structure, including its foundation, roof, walls, and other structural components, as well as personal belongings such as furniture, electronics, and other items. Home insurance also provides liability coverage if someone is injured on your property and requires medical attention or legal representation. 

On the other hand, a home warranty repairs and replaces appliances and systems that home insurance typically doesn’t cover, such as heating and cooling systems, plumbing, electrical systems, and kitchen appliances. The coverage policies of a home warranty can vary depending on the plan and provider, so always review the contract to understand what’s covered and what’s not covered by a home warranty.

Deductibles and Service Fees

For home insurance, deductibles are a fixed amount, typically ranging from $500 to $2,000, that you must pay before your insurance coverage begins. On the other hand, service fees for home warranties are paid per service request. They typically range from $50 to $125 and depend on the provider and the plan.

Unlike deductibles, service fees remain the same regardless of the cost of the repair or replacement. Additionally, home warranty service fees are often less expensive than insurance deductibles, making them a more affordable option for you.


Home insurance policies are designed to cover sudden and unexpected events that cause damage to the home or belongings, such as fires, theft, or natural disasters. On the other hand, home warranty claims are typically made when appliances or home systems fail due to normal wear and tear. The claims process for home insurance is typically more complex and time-consuming. You must document the damage, file a claim, and wait for an adjuster to assess the damage. With a home warranty, you simply contact the warranty provider and schedule a service call to repair or replace the covered item.


The average annual cost of home insurance in the United States is $1,784 and it can vary based on the location, coverage amount, deductible, location, and other factors.

On the other hand, the average cost of a home warranty is around $600 to $800 per year and can differ based on the type of plan chosen, the service fee or deductible charged, and additional options added to the plan. Despite the difference in costs, having both home insurance and a home warranty can provide complete coverage and protection for your home and belongings.


Depending on the provider and the type of plan chosen, home warranty policies can be renewed on a monthly or yearly basis, whereas home insurance is renewed annually. This allows you to have greater control over their coverage and make changes as needed. Some home warranty providers even offer the option to customize coverage by adding or removing specific appliances or systems. Some providers may increase the premium with each renewal, so you should review their options carefully and choose a plan that fits your budget and needs.


Home insurance policies may exclude coverage for floods or earthquakes. However, you can purchase separate policies for such events. Home warranty contracts also have exclusions, such as pre-existing conditions or improper maintenance. Pre-existing conditions are issues that existed before the beginning of the contract and are not covered. Improper maintenance refers to the lack of proper care for an appliance or system, which can result in damages not being covered. Always review the exclusions of both home insurance policies and home warranty contracts to ensure that they meet your needs.

Requirement by Law

While home insurance is often a requirement by lenders to obtain a mortgage, a home warranty is not required by law. Home insurance is essential to protect the lender’s investment in the property and is often required by the mortgage company as a condition of the loan. On the other hand, a home warranty is optional. You can purchase it to cover the repair or replacement of home appliances and systems. While a home warranty is not legally required, it can come with peace of mind and save money on repairs and replacements.

Service Providers

When filing a home insurance claim, an insurance adjuster evaluates the damage, estimates the cost of repairs, and negotiates a settlement with you. On the other hand, home warranty claims are usually handled by contracted service providers who are licensed and insured professionals with expertise in repairing and replacing home appliances and systems. Home warranty providers have a network of pre-approved service providers and you can contact them to schedule repair or replacement services. These service providers undergo a background check and must meet certain qualifications and standards set by the home warranty company.

In Conclusion

As a homeowner, you must understand the difference between home warranties and home insurance. While home insurance covers damages to the home and personal belongings, liability for injuries, and temporary housing, a home warranty covers repairs and replacements of home appliances and systems due to normal wear and tear. Both have their benefits and limitations, so carefully evaluate your needs and choose the right coverage for your home.

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