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

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

Many homeowners (especially first-timers) are confused by two terms that sound similar but offer very different protection: home insurance and home warranty.

Here’s a quick guide to help you understand what each one covers — and why you might need both.

🏠 What Is Home Insurance?

Home insurance (also called homeowners insurance) is a mandatory policy if you have a mortgage. It protects your home against unexpected disasters, such as:

• Fire
• Storm damage
• Theft
• Water damage (from burst pipes, not floods)
• Personal liability (if someone gets injured on your property)

💡 Most policies also cover the structure, your belongings, and sometimes living expenses if you need to move out temporarily.

🔧 What Is a Home Warranty?

A home warranty is a service contract that covers breakdowns of major systems and appliances due to normal wear and tear.

Think:

• HVAC system
• Plumbing
• Electrical systems
• Washer, dryer, fridge, oven

⚙️ It’s not required, but can save you thousands in repairs.

📊 Side-by-Side Comparison

Feature	Home Insurance	Home Warranty
Required by mortgage?	Yes	No
Covers structure?	Yes	No
Covers personal items?	Yes	No
Covers appliances?	No	Yes
Covers wear & tear?	No	Yes
Covers natural disasters?	Yes	No
Cost (avg/year)	$1,200–1,800	$300–600

🛡️ Do You Need Both?

If you own a home, especially an older one — yes.

• Home insurance protects your biggest asset from disasters.
• Home warranty helps keep your house running without surprise repair bills.

Think of it this way:
Insurance = protection from sudden damage
Warranty = peace of mind for aging equipment

🛒 Where to Buy

• Home Insurance:
  Liberty Mutual
  Lemonade
• Home Warranty:
  American Home Shield
  Choice Home Warranty

📢 Tip: Bundle your home insurance with auto or renters insurance to get up to 25% off.