Home Warranty Vs. Home Insurance: What’s the Difference?​

Lydia Schapiro
Written by Lydia Schapiro
Updated May 31, 2022
Couple in the kitchen preparing breakfast
Photo: Dean Mitchell / E+ / Getty Images


  • Home warranties cover appliances and systems that need replacement or repair.

  • Home insurance covers damage due to major events such as a fire or theft. 

  • Both forms of protection may exclude some items in their coverage, but you can usually purchase extra coverage if necessary.

Get quotes from up to 3 pros!
Enter a zip below and get matched to top-rated pros near you.

So, you’re about to make the ultimate homeowner plunge: buying a home. This is an exciting endeavor, and one you should celebrate—but it’s also important to invest in home protection.  

Luckily, homeowners have options when it comes to protection, including home warranties and home insurance. When it comes down to it, though, it can be difficult to distinguish between the two options. So, what’s the difference between a home warranty and home insurance? Let’s find out.

Home Warranty Pros & Cons ​

Review these key home warranty pros and cons to learn more about this type of home protection.

Pros of Home Warranties

Check out these home warranty benefits.

  • Peace of mind: Having a home warranty can provide you with peace of mind that you’ll have financial security for unexpected home repairs. 

  • Flat fee for repairs: Instead of a costly repair, you’ll pay a monthly premium and service fee.

  • Fast service: Most reputable home warranties companies have an on-call claims center, so you can schedule maintenance or repair services as quickly as possible. Plus, most home warranties send a technician or repair professional within 24 to 48 hours.

  • Transferable warranty: Another benefit is that home warranties are often transferable, meaning that when you purchase a home warranty, you may be able to transfer it to the new tenant when/if you sell your home. 

Cons of Home Warranties

Check out these home warranty drawbacks.

  • Cost in the long run: The monthly premium cost and the service fees can add up over time. A home warranty typically costs between $200 and $1,800 per year.

  • Exclusions: Something else to consider is that home warranties don’t cover some things such as pre-existing conditions, animal infestations, or recalled products. Check your warranty’s list of exclusions before making a claim.

  • Limited network of professionals: A drawback to home warranties is that there is a limited network of professionals, and you don’t get to choose your repair or service person. If you do the work yourself or go through an outside contractor, warranty companies usually won’t offer you reimbursement. 

Home Insurance Pros & Cons​

Senior man using laptop in his living room
Photo: 10'000 Hours / DgitalVision / Getty Images

Learn about the benefits and downsides to having home insurance. 

Pros of Home Insurance

Check out the benefits of home insurance plans.

  • Coverage for home and possessions: Home insurance protects your home and your belongings in the event of a catastrophic event. After filing a home insurance claim, you would receive a check for the amount covered.

  • Covers costly damage: A major benefit to having a home insurance unit is that it’ll cover significant damage that, out of pocket, would likely be very costly. Some examples are damages due to a fire, explosions, or lightning. 

  • Lawsuit protection: Another upside to having home insurance is that you have lawsuit protection. If someone gets hurt on your property, you most likely won’t be liable to pay their medical bills. 

Cons of Home Insurance

Check out the drawbacks of having home insurance.

  • Cost: One major downside to home insurance is the cost. The average annual cost of home insurance is $1,500. Plus, if you pay for coverage add-ons, the price will increase.

  • Exclusions: A standard home insurance policy won't cover everything. Like a home warranty, standard home insurance policies usually don’t cover damage due to events such as earthquakes and flooding, so you’ll have to purchase extra coverage. 

Hidden costs: Insurance companies are very specific about what they cover, so you may end up paying significantly more for services outside of your plan’s coverage. Before signing onto a policy, read all the fine print in the terms and conditions very carefully.

Home Warranty vs. Home Insurance 

Woman adjusting thermostat next to a mirror
Photo: Monty Rakusen / Image Source / Getty Images

Before making any decisions when it comes to protecting your home, it’s a good idea to learn about all the major differences and similarities between home warranties and insurance. 


Home warranty coverage typically includes the main systems in a home such as heating, cooling, plumbing, and electrical. Some home warranties may also cover repairs and replacements to large appliances, such as dishwashers, ovens, and refrigerators.

On the other hand, home insurance covers damage to your home’s structure and personal property due to major events such as fires, theft, explosions, trees, wind, and water damage. 

A standard home insurance policy typically does not cover damage from floods or earthquakes—but, you can purchase extra coverage to have that increased peace of mind. 

Home insurance also covers your legal liability as a homeowner if someone gets injured while on your property. 

Best for coverage: Tie


Often, home warranties provide optional add-ons that offer extra coverage for items not typically covered, such as pool pumps, septic tanks, and well pumps. 

Similarly, there are different types of home insurance policies you can purchase. You can opt for a peril policy, which provides basic coverage, or get an all-risk insurance policy that offers extra coverage. 

Most options: Tie


With a home warranty, you’ll pay a yearly premium that typically costs between around $200 and $1,800 per year.  In addition, when a system or appliance breaks down and you need professional help, you’ll pay a flat service fee, which is also called a deductible. On average, home warranty deductibles usually cost around $75 to $125 per call. A general rule of thumb: The lower the service fee, the higher your annual fee, and vice versa. 

On average, home insurance costs around $1,500 per year. This price can vary depending on factors such as where you live, your home’s size and condition, your credit score, and the value of your personal items. Similarly to home warranties, homeowners usually have to pay a deductible when they file a claim. The higher the deductible, the lower the premium. On average, deductibles associated with home insurance range from around $500 to $2,000 or more

Most cost-effective: Home warranty 

Need professional help with your project?
Get quotes from top-rated pros.