For Home BuyersFor Home Sellers January 23, 2023

Homeowners Insurance vs Home Warranty

Homeowners insurance and home warranties are both important forms of protection for homeowners, but they serve different purposes.

Homeowners insurance is a type of insurance that provides financial protection against loss or damage to a person’s property and personal belongings due to covered events such as fire, theft, and certain natural disasters.

Homeowners insurance,  is typically required by mortgage lenders as a condition of obtaining a home loan. According to the Insurance Information Institute, about 96% of homeowners have some form of homeowners insurance.

Home Warranty  is a service contract that provides repair or replacement coverage for specific systems and appliances in a home, such as the heating and cooling system, plumbing, and major appliances.

One of the main reasons someone should consider getting a home warranty is that it can provide peace of mind and financial protection against unexpected repairs and replacements. According to the National Home Warranty Association, the average cost of a home warranty claim is $600, which can be significantly less than the cost of a major repair or replacement without a warranty. Additionally, a home warranty can help homeowners avoid the hassle and uncertainty of finding and vetting contractors for repairs.

Home warranties are not required by law, but they are often purchased by the home buyers.


It’s worth noting that home warranties and homeowners insurance are not interchangeable. Homeowners insurance typically does not cover repairs or replacements for appliances and systems, and a home warranty does not cover damage or loss due to covered events such as fire or theft. Therefore, it’s essential for homeowners to understand the difference between the two and consider the specific coverage they need for their property and personal belongings.


Here are some general sources where you can find more information on the topic of home warranties and homeowners insurance.

  • The National Home Warranty Association (NHWA) is a trade organization that represents home warranty companies and provides information and resources on home warranties. The NHWA website ( has information on the benefits of home warranties, frequently asked questions, and a directory of home warranty companies.
  • The Insurance Information Institute (III) is a nonprofit organization that provides information and resources on insurance. The III website ( has information on homeowners insurance, including coverage options, tips for purchasing and maintaining coverage, and research and statistics on homeowners insurance.
  • The Federal Reserve’s Consumer Financial Protection Bureau (CFPB) is a government agency that provides information and resources on consumer financial products and services, including home warranties. The CFPB website ( has a section on home warranties with information on the different types of warranties, what to look for when buying a warranty, and how to file a complaint if you have a problem with a warranty.