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

Home warranties and home insurance are two completely different products that protect different parts of your home. They are often confused because both involve your house and both require regular payments, but they cover entirely different risks. Understanding the difference helps you avoid paying for coverage you do not need and, more importantly, helps you avoid gaps in protection.

Home insurance (also called homeowners insurance) covers your home’s structure and belongings against damage from covered perils such as fire, storms, and theft. See our homeowners insurance guide for a full overview. A home warranty, on the other hand, is a service contract that covers the repair or replacement of home systems and appliances (HVAC, plumbing, water heater, kitchen appliances) when they break down from normal wear and tear. Most homeowners benefit from having both, especially if their home has older systems and appliances.

Quick Comparison

Feature	Home Insurance	Home Warranty
What it covers	Structure and property damage from covered perils	Appliance and system breakdowns from wear and tear
Required?	Yes (by mortgage lenders)	No (optional)
Typical cost	$1,500-$3,000/year	$300-$600/year
Deductible	$500-$2,500 per claim	$75-$125 service call fee
Who provides it	Insurance companies	Home warranty companies
Example claim	Roof damaged by hail	HVAC system stops working

What Home Insurance Covers

A standard homeowners insurance policy (HO-3) provides protection across four main areas:

Dwelling coverage. Pays to repair or rebuild your home’s structure if it is damaged by a covered peril such as fire, wind, hail, or lightning. Understanding the difference between replacement cost and actual cash value is important when selecting your dwelling coverage amount.
Personal property coverage. Covers your belongings (furniture, electronics, clothing) if they are damaged, destroyed, or stolen.
Liability protection. Pays for legal costs and damages if someone is injured on your property or if you accidentally cause damage to someone else’s property.
Additional living expenses. Covers the cost of temporary housing and related expenses if your home becomes uninhabitable after a covered loss.

For full details on what a homeowners policy includes, see our homeowners insurance guide.

Home insurance does not cover normal wear and tear, mechanical breakdowns, or routine maintenance issues. These are some of the most common surprises for homeowners filing a claim. See what homeowners insurance does not cover for the full list of exclusions.

What a Home Warranty Covers

A home warranty is a service contract, not an insurance policy. When a covered system or appliance breaks down from normal use, you file a claim, pay a service call fee, and the warranty company sends a technician to repair or replace the item. Typical coverage includes:

HVAC systems (heating and cooling)
Plumbing systems and water heaters
Electrical systems
Kitchen appliances (refrigerator, dishwasher, oven)
Washer and dryer (sometimes included in base plans, sometimes optional)
Garage door openers

Coverage varies significantly by plan and provider. Some companies offer basic plans that cover only major systems, while premium plans include appliances and optional add-ons like pools and septic systems. Always read the contract carefully before purchasing.

What Neither Product Covers

Even with both a home warranty and home insurance, several real-world losses fall outside both contracts:

Flood damage. Rising water from storm surge, overflowing rivers, or heavy rainfall is excluded by standard home insurance and is never covered by a home warranty. Flood damage requires a separate NFIP or private flood policy.
Earthquake damage. Standard homeowners policies exclude earth movement, and warranties have no role here. You need a separate earthquake endorsement or policy.
Normal wear on the roof. A roof that has simply reached the end of its lifespan is not a covered insurance peril, and a warranty does not pay to replace structural components like roofing or windows.
Cosmetic damage. Dents, scratches, and cosmetic wear that do not affect functionality are generally not covered by either product.
Pre-existing conditions, code upgrades, and poor maintenance. Known issues, work needed to meet current building codes, and failures caused by improper installation or neglect are routinely excluded by both products.

If you face damage that requires an insurance claim, our home claims step-by-step guide walks through documentation, deadlines, and adjuster communication.

Do You Need Both?

Home insurance is not optional for most homeowners. Mortgage lenders require it, and even homeowners who have paid off their mortgage need it to protect against catastrophic losses like fire or severe storm damage. Going without homeowners insurance means absorbing the entire cost of rebuilding your home yourself.

A home warranty is optional but can save significant money on unexpected repair bills. The decision comes down to the age and condition of your home’s systems and appliances. First-time buyers and owners of homes older than 10 years tend to benefit the most from a home warranty, because aging HVAC systems, water heaters, and appliances are more likely to break down. If your home is newer and your major systems are still covered by manufacturer warranties, a home warranty may not provide enough value to justify the cost.

Cost Comparison

The two products are priced very differently. Use the ranges below as a starting point and confirm with your own quotes.

Product	Typical annual cost	What it pays for
Homeowners insurance	$1,400–$2,200	Sudden damage, theft, liability
Home warranty (basic)	$350–$600	Appliance + system breakdowns
Home warranty (with add-ons)	$600–$1,000	Adds pool, septic, secondary fridge, etc.

Figures are approximate national averages drawn from the Insurance Information Institute (homeowners) and Angi’s published home-warranty pricing surveys; actual quotes vary by home size, age, location, and contract terms. For a deeper breakdown of homeowners pricing factors, see our homeowners insurance cost guide and what impacts your home insurance rate. Home warranty plans also charge a $75 to $125 service call fee on each claim, which the table does not include.

Frequently Asked Questions

Does home insurance cover appliance breakdowns?

No. Home insurance covers damage from covered perils like fire, storms, and theft. It does not cover mechanical breakdowns or normal wear and tear. If your refrigerator stops working because the compressor fails from age, home insurance will not pay for the repair. That is what a home warranty covers.

Is a home warranty required?

No. Unlike home insurance, which mortgage lenders require, a home warranty is entirely optional. No lender or government entity requires you to have one. It is a personal financial decision based on the age and condition of your home’s systems and appliances.

Can I file a home warranty claim and a home insurance claim for the same issue?

Sometimes. The two products can apply to different aspects of the same event. For example, if a storm causes a power surge that damages your HVAC system, your home insurance may cover the storm damage to your home while your home warranty might cover the HVAC repair. The key is that each product addresses its own type of loss.

Should first-time homebuyers get a home warranty?

It is worth considering, especially if the home has older appliances and systems that may be nearing the end of their useful life. Sellers sometimes include a home warranty as part of the sale to provide buyers with extra peace of mind. See our guide on the cheapest home insurance for first-time buyers for more tips on protecting your first home without overspending.

Is a home warranty worth it for new construction?

Usually not in the first few years. New homes typically come with builder warranties on the structure and manufacturer warranties on appliances and major systems, so a home warranty would duplicate coverage you already have. It becomes more worth considering after the manufacturer warranties expire (often 1–2 years for appliances and up to 10 years on some structural components), or if the original warranties are non-transferable and you bought the home second-hand.

Can a home warranty replace homeowners insurance?

No. A home warranty cannot replace homeowners insurance and is not accepted by mortgage lenders as proof of coverage. The two products solve entirely different problems: a warranty covers mechanical failure of appliances and systems from normal wear and tear, while homeowners insurance covers sudden, accidental damage to the structure and contents (fire, storms, theft) plus personal liability. Going without homeowners insurance leaves you personally responsible for rebuilding costs after a major loss, no matter how comprehensive your warranty is.

Practical Next Steps

Review your current homeowners insurance policy to understand what it covers and what it excludes. If your major systems, including your HVAC, plumbing, and water heater, are more than 10 years old, get quotes from two or three home warranty companies and compare what each plan covers. Coverage varies significantly between providers, so read the fine print on exclusions and service call fees before you commit.

Sources

Insurance Information Institute (III)
National Association of Insurance Commissioners (NAIC)
Consumer Financial Protection Bureau (CFPB)