Navigating Home Protection: Home Warranty vs. Homeowners Insurance

Owning a home means being prepared for the unexpected—and that’s where home protection plans come in. Two of the most common ways homeowners protect their investment are through home warranties and homeowners insurance. But what’s the difference? Do you need both? And how do you choose the right plan?

Let’s break it all down so you can make confident decisions about protecting your home, your budget, and your peace of mind.

What Is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of major home systems and appliances that break down due to normal wear and tear. Think things like your HVAC system, water heater, refrigerator, or washer and dryer. If your dishwasher dies unexpectedly or your furnace stops heating in the middle of winter, your warranty provider will either send someone to fix it—or help cover the cost of replacement.

Common Items Covered by a Home Warranty:

• Heating and cooling systems
• Plumbing systems
• Electrical systems
• Kitchen appliances (stove, oven, refrigerator)
• Laundry appliances (washer and dryer)
• Garage door openers
• Ceiling fans

Home warranties typically cost between $300 to $600 per year, with a service fee of $60 to $125 per visit when a repair tech is sent out.

What Is Homeowners Insurance?

Homeowners insurance is a policy that protects you financially if your home is damaged or destroyed by certain events. It also covers your personal belongings and can offer liability protection if someone gets hurt on your property.

Events usually covered include:

• Fire or smoke damage
• Storms (wind, hail, lightning)
• Theft or vandalism
• Water damage from burst pipes
• Liability for injuries on your property

Homeowners insurance is required by most mortgage lenders, and the average annual premium in the U.S. is around $1,400, depending on your home’s location, size, and value.

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

The key difference comes down to what each one covers.

Feature	Home Warranty	Homeowners Insurance
Covers appliance/system breakdowns	✅ Yes (due to wear and tear)	❌ No
Covers damage from natural disasters	❌ No	✅ Yes (fire, storms, etc.)
Covers theft and vandalism	❌ No	✅ Yes
Covers plumbing or HVAC repair	✅ Yes (if due to normal failure)	✅ Sometimes (if sudden and accidental damage occurs)
Covers roof leaks	✅ Sometimes (depends on plan)	✅ Yes
Required by lenders	❌ No	✅ Yes
Annual cost (avg.)	$300–$600	$1,000–$2,000
Deductible / service fee	$60–$125 per repair	$500–$2,500 per claim

In short: homeowners insurance covers big, unexpected disasters; home warranties cover everyday breakdowns.

Do You Need Both?

In many cases, yes. While your homeowners insurance might pay for repairs after a tree crashes through your roof, it won’t help when your dishwasher quits out of nowhere. A home warranty fills in that everyday coverage gap.

Especially for new homeowners—or anyone moving into an older home—having both can provide more complete peace of mind.

When a Home Warranty Makes Sense:

• You’re buying a home with older systems or appliances
• You don’t have an emergency fund for surprise repairs
• You’re not handy or don’t want to manage contractors

When Homeowners Insurance Is Essential:

• You have a mortgage (it’s required)
• You want protection from disasters like fire, storms, or burglary
• You want liability protection in case of accidents

Real-Life Example

Let’s say you just bought a house. A month in, the water heater fails. If you have a home warranty, you call your provider, pay a $75 service fee, and they send a technician to fix or replace it.

Now imagine a storm hits, causing major roof damage and a water leak into your living room. That’s where homeowners insurance kicks in—you file a claim, pay your deductible, and the insurance company helps cover the cost of repairs.

What’s Not Covered?

Both types of protection have their limitations, so it’s important to read the fine print.

Typical Exclusions in Home Warranties:

• Pre-existing conditions
• Poor maintenance
• Cosmetic issues (like dents or scratches)
• Outdoor features (sprinklers, pools—unless added)

Common Exclusions in Homeowners Insurance:

• Floods (requires separate flood insurance)
• Earthquakes (requires separate policy)
• Routine maintenance issues
• Pest damage

How to Choose a Home Warranty Plan

Not all warranty companies are created equal. Look for:

• Transparent pricing and contract terms
• Good reviews and BBB rating
• 24/7 customer service
• Wide contractor network
• Options to customize coverage (add-ons for pools, septic systems, etc.)

Popular providers include American Home Shield, Choice Home Warranty, and Liberty Home Guard.

How to Shop for Homeowners Insurance

When choosing a homeowners insurance policy, consider:

• Coverage limits (Dwelling, personal property, liability)
• Deductible amount (Higher deductible = lower premium)
• Reputation and customer service
• Available discounts (bundling, home safety devices, loyalty)

Don’t be afraid to shop around—compare at least three quotes from insurers like State Farm, Allstate, Liberty Mutual, or Lemonade.

Cost Breakdown Table: Home Warranty vs. Homeowners Insurance

Feature	Home Warranty	Homeowners Insurance
Average Annual Cost	$300–$600	$1,200–$2,000
Deductible / Service Fee	$60–$125 per call	$500–$2,500 per claim
Coverage Start Time	30-day waiting period	Immediate (once active)
Term Length	1 year (renewable)	1 year (renewable)
Coverage Type	Appliances & systems	Structure, possessions, liability

Final Thoughts: Cover Your Bases

Protecting your home isn’t just about safeguarding against disasters—it’s also about managing the day-to-day hiccups that come with homeownership. That’s why many homeowners choose to have both a home warranty and homeowners insurance. Together, they offer comprehensive coverage that keeps you financially protected whether you’re dealing with a burst pipe or a broken microwave.

In the end, it’s about your risk tolerance, your budget, and how much peace of mind you want. A little research now can save you a lot of stress (and money) later.