Owning a home is expensive, but there are ways to bring these costs down. Responsible homeowners invest in home warranties and home insurance. But what’s the difference? Why invest in both home insurance and a home warranty? Aren’t they both the same?

The answer is that home warranty and home insurance plans are actually very different. Not only do they vary in terms of cost, coverage, and conditions, but home insurance is sometimes required of homeowners, whereas a home warranty plan is always just a recommended supplement. Let’s take a look at some of the finer details of home warranty vs. home insurance, to understand why you might want to opt for both.


Home warranty:

The items covered under a home warranty will be different under different companies and plans, so you’ll want to shop around for what is best for you. A good home warranty plan should cover appliances and systems like the following:

  • Air conditioning
  • Heating system
  • Central vacuum
  • Ceiling fans
  • Water heater
  • Electrical system
  • Plumbing system
  • Garage door opener
  • Washer/dryer
  • Dishwasher
  • Microwave
  • Oven range
  • Refrigerator
  • Trash compactor

Home insurance:

Home insurance is not mandatory. However, lender will most likely require you to purchase home insurance if you are financing your house with a mortgage. Like a home warranty plan, what is covered under home insurance will vary depending on your state of residence and type of policy, but generally, the following should be covered:

  • Structure and contents of the home
  • Personal property, including outdoor and indoor furniture, clothes and home electronics
  • Jewelry
  • Living expenses, if your home becomes uninhabitable due to a natural disaster
  • Circumstances such as hail, fire, theft, lighting, vandalism, wind, and falling objects like trees
  • Liability claims, if someone gets hurt on your property and chooses to sue you

The simplest way to think about differences in coverage between home warranty and home insurance is that home warranty covers appliances and systems, while home insurance covers a home’s structure as well as its contents.


Home warranty:

The cost of a home warranty will, of course, vary depending on what kind of plan you get, but they typically run for around $300 to $500 for a year of coverage. When you consider that a new refrigerator alone costs around $1,200, paying for coverage is really a small investment for a big payoff—especially if you make good use of it.

Home insurance:

Costs of home insurance plans will vary from state to state and what kind of coverage you get, but a standard plan will cost between $500 and $1,000 per year.

Added Benefits 

Home warranty:

There are many benefits that come with a home warranty in addition to the appliances and systems that are covered. When it comes time to sell your home, your home will be more attractive to potential buyers; with a home warranty, it’s more marketable and could sell more quickly, and at a higher price.

Home insurance:

Though home insurance is mandatory, you’ll be happy you have it. Little things happen all the time and, though we hope otherwise, more extensive and costly things happen. Rest easy with a good home insurance planning knowing that your possessions are covered regardless of how old they are, interiors and exteriors are covered, and it is a simple process to renew.

Both home warranty and home insurance office peace of mind. If you purchase each, not only will your entire home will be covered, but you’ll also up your home’s resale value.

So do a little research, shop around, and find a home warranty and home insurance plan that works for you. The peace of mind that you’ll get is enough to make it well worth it.

Top Image Credit: Graciela Rutkowski Interiors