A decent place to live is a huge necessity and a dream for many. Living on rent doesn’t feel the same as living in one’s own house. However, it does not end at just that. The stability and sense of accomplishment mortgage induce is, sooner or later, followed by dealing with huge repair bills. 

To sustain a habitable environment, the investments made are incomplete unless you go for home warranties and insurances. Imagine buying a home, and an uncontrollable event like a major earthquake tears it all apart in the blink of an eye. The emotional, as well as financial setback, would be devastating. 

These risks make home insurance and home warranty plans an essential investment. A lot of people, however, have doubts regarding the difference between the two and their respective significance. This is where we swoop in with a crisp article, acknowledging the importance the two of them hold.

“Insurance or Warranty, what difference will it make?”

Home Insurance and Home Warranty are not the same. The respective coverage they provide makes all the difference in the world. One should know the difference between the two and choose what they truly require to secure their homes. 

The need for Home Insurance

If there is a lightning storm that causes a tree branch to crash into the roof of your place,  for example, home insurance swoops in to give you a hand in scenarios like these. 

  1. Home insurance has got your back when damage is incurred to your house or belongings because of natural disasters. The includes damage caused by fire, weather, theft, earthquake, and others of that sort.
  2. When any of the aforementioned reasons causes damage, the insurance company pays for the damage. The parts of your house that were damaged are repaired or replaced. It includes appliances, jewelry, clothes, and other insured items. This coverage can also be extended to the victims of burglary. 
  3. The overseeing of  home insurance companies is under the supervision of individual states and not any federal agency. They make sure that insurance companies can pay the customers’ claims. Apart from financial inspection, they also investigate customer complaints. They make sure that business is conducted fairly, and that companies follow laws.   
  4. Home insurances do not cover repairs regarding in-built systems like A/C, water heater or fritz, etc. 
  5. They do not cover any damage that was not accidental.

The need for a Home Warranty Plan

Home Warranty is a cheaper alternative that deals with a warranty of not the house as a whole but of individual appliances. 

A homeowner in Atlanta, Carol Gee, had a 45-year-old warranty coverage that the former owner had established.  She used to wonder if she really needed it or not but continued to renew it anyway. One day her water heater failed, and purchasing one would have cost her even more than the annual warranty fee. The warranty helped her deal with the damage that would have cost her a small fortune. Later, she extended the contract to other appliances as well.

  1. Home warranties help in getting appliances and built in systems insured.
  2. Different warranty plans offer different kinds of coverage to the clients. The necessary appliances included in all are: 

3.     They help cover a significant chunk of appliances and systems so that clients have a robust coverage to rely upon during a breakdown. 

4.     Small appliances are excluded like toasters, sandwich makers, coffee makers, and so on. 

Chris Hackett, the director of the Chicago-based personal lines policy in the Property Casualty Insurers Association of America, provided his insight into home warranty experience. He said that getting a warranty plan for a newly constructed home would sound stupid. However, when the builder or Realtor throws it in for free, it’s definitely worth keeping. It’s hard to understand the value of a warranty plan until, god forbid, something goes wrong. If you live in a house that is particularly susceptible to damage, it’s better to be prepared. 

Differences between Home warranty and Home insurance


An underwriter assesses the risk by paying a visit to the home when we apply for home insurance. They consider factors like history, location, contents, construction, and the age of your home. After that, the price and premium for the insurance plan are derived accordingly. 

Home warranties, on the other hand, do not require underwriting. The premium and warranty plan is the same for one and all.  

Automatic Renewal

Clients enjoy automatic renewals of home insurance. As long as one pays the premiums, he or she has insurance coverage. Home warranties, on the other hand, require renewal. Warranties are for a limited time, and after that, the clients need to renew them.

The advantage is that you can search for better warranty plans when the current runs out and avail new member discounts on them. The disadvantage is that if a client forgets to renew the warranty, it will lapse, and any damage that occurs won’t be covered.   


To receive mortgages, having home insurance is generally necessary. On the other hand, having a home warranty is not mandatory and generally not required. It is optional.

Personal Liability coverage

Home insurances mostly cover personal liability, but the home warranty does not. In simple words, if an inhabitant or any member of the family on the property is hurt in an accident, the home insurance covers medical costs concerning bodily harm. The loss of wages of the hurt member and legal fee is also covered in the personal liability coverage.    

Extra coverage

Most warranty companies provide extra coverage to clients like the protection of swimming pools and spas if they choose a bigger coverage. Home insurance, on the other hand, does not offer anything of that sort.

Limited coverage

Home Warranty companies put a limit to the maximum coverage they would provide to the clients. Whereas, Homeowner’s Insurance usually covers around 50% to 70% of the total insured amount. You might have to conduct a home inventory for the same, which allows the companies to better understand the total worth of your assets. It might also include liability protection and additional living expenses, in case you are not able to put up at your place due to the damage.

Surprises down the road

What is covered and not under Home insurance is apparent right from the beginning because of underwriting. However, home warranty companies don’t undertake any assessments and may deny coverage of the appliance later because of factors like improper installment, area building codes, improper usage or lack of maintenance, etc.   


The cost of home insurance is usually higher than a home warranty. U.S. average annual premium for Home insurance is $1,211, while for a home warranty policy, it ranges between $300 and $600. 

Importance of Both

What is a home without its assets and vice versa? Hence, protecting a home as well as saving integral assets is the best deal. To have a safe and sound packaged deal, we need to purchase both home insurance and home warranty plans. In this way, you will ensure coverage for not just the worst-case scenario of natural disasters but also frequent yet significant repairs. 

It would protect you, your property, your assets, and your peace of mind. Life happens, and problems are a part of it. Hence, it is better to be fully prepared for anything that can come your way rather than waiting for things to break and then looking for a solution.

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