We may be compensated if you purchase through links on our website. Our Reviews Team is committed to delivering honest, objective, and independent reviews on home products and services.More

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

Author Icon Written by Dana Getz + 1 other Reviewer Icon Reviewed by Jacquelyn Kfoury Updated 03/25/2024

Home warranties and home insurance are two distinct types of coverage that lower homeowners’ risk of financial loss. While the two are similar, a home warranty and home insurance policy protect your property in different ways. In this article, we’ll differentiate between home warranty contracts and homeowners insurance plans before explaining how both can help protect your house.

VISIT SITE $200 Off + 2 Months free + Free Roof Leak Coverage
Monthly Cost $49–$59
Service Fee $65–$125
BBB Rating NR
States Covered 50
VISIT SITE 40% OFF Our Most Popular Plan
Monthly Cost $29–$89
Service Fee $100–$125
BBB Rating B
States Covered 48
VISIT SITE Use Code HOUSE25 for $150 Off & 2 Months Free
Monthly Cost $44–$47
Service Fee $60–$75
BBB Rating B-
States Covered 47
VISIT SITE $100 Off with code PROTECT
Monthly Cost $42–$82
Service Fee $75–$125
BBB Rating B
States Covered 35

Differences Between Home Warranties and Home Insurance

Both home warranties and home insurance policies are great ways to protect your house, with each offering unique benefits and covering different circumstances. Here’s a chart comparing the cost and details of the two types of coverage.

ComparisonHome WarrantyHome Insurance


Repairs and replacements to major systems and appliances such as your air conditioner, refrigerator, and dishwasher

Dwelling, other structures, personal property, loss of use, liability, and medical payments to others

Average yearly cost



Average cost of service fee



Average length of contract

One year (though some companies offer multiyear contracts)

One year

Renewed annually?





Not required by law, but required by most mortgage lenders

What Is a Home Warranty?

A home warranty, also known as a residential service contract, covers repair or replacement costs associated with a major system or appliance failure. For example, if your home’s air conditioning system or dishwasher breaks due to normal wear and tear, your home warranty provider will schedule a repair visit with a local technician to get the covered item fixed or replaced.

When a covered item fails, you can submit a service request online or by phone in most cases. Once your claims request is processed, your provider will send a vetted service technician to evaluate the issue. Some home warranty providers even allow you to select your own contractor for repairs or replacements.

A technician will typically come to your house within 48 hours to evaluate the issue. If the breakdown is due to wear-and-tear damage, the technician will either repair or replace your broken item. You’ll pay the technician an agreed-upon service fee or deductible which is detailed in your home warranty contract. Most service fees range from $75–$125 and you’ll pay them each time a technician visits your home.

What Does a Home Warranty Cover?

A home warranty covers common household appliances and systems. While some providers offer plans covering everything, many separate them into systems-only plans, appliance-only plans, and combination plans. In addition to appliance and system coverage, many home warranty companies offer optional add-ons for specialty items such as your pool or sump pump. Some providers offer additional perks such as rekey services, identity protection, and HVAC maintenance.

Note that home warranties only pay for repair and replacement of covered items from certain types of damage. Often, the cost will only be covered if the system or appliance wears out in the course of normal use. This is called wear-and-tear damage. Some home warranty companies take care of other types of damage but most won’t cover breakdowns due to insufficient maintenance, improper repairs, preexisting conditions, rust, corrosion, or sediment.

Below are the common appliances and systems covered under home warranty plans along with popular choices for additional coverage.

Common appliances covered:

  • Refrigerator
  • Built-in microwave
  • Dishwasher
  • Oven/range/stove
  • Clothes washer and dryer
  • Garbage disposal

Common systems covered:

  • Air conditioning
  • Heating
  • Electrical
  • Plumbing
  • Ductwork
  • Water heater

Additional coverage items:

  • Pool or spa equipment
  • Well pump
  • Sump pump
  • Septic tank
  • Roof-leak coverage

Who Should Buy a Home Warranty?

While home warranties aren’t necessary, they provide a useful layer of protection for essential systems and appliances. For example, if the manufacturer’s warranty on each of your appliances expires, a home warranty can offer protection and replace that expired coverage. There’s typically no age limit on covered items, so those with older homes, systems, and appliances are likely to benefit.

Additionally, homeowners with limited emergency funds may find a home warranty useful. Instead of worrying about unexpected expenses, you’ll pay a consistent amount for a premium every month or year. A home warranty also prevents you from searching for reliable contractors on your own since most home warranty providers use a list of vetted service technicians.

Home warranties are often discussed during the homebuying process. Many homebuyers will ask the seller for a home warranty to cover appliances and systems within the new house. This gives the new homebuyer peace of mind that they won’t incur unexpected repair or replacement expenses early into homeownership.

What Is Home Insurance?

Home insurance policies protect your home from issues and you from liability if someone gets hurt on the property. Additionally, home insurance policies offer protection if you damage someone else’s property. You’ll pay a monthly or yearly premium and receive peace of mind that you won’t have to pay out of pocket for covered events.

Like home warranty providers, a home insurance company processes claims online or by phone. For your claim to be approved, it must be caused by a covered peril such as:

  • Frozen plumbing
  • Theft
  • Vandalism
  • Fire and lightning
  • Falling objects
  • Civil issues
  • Explosions
  • Water damage due to a leaking roof
  • Hail damage
  • Sudden and accidental tearing apart, cracking, burning, or bulging

Once your claim is approved, you’ll pay a set deductible and talk to your assigned insurance agent about next steps.

What Does Home Insurance Cover?

Most home insurance policies contain six areas of coverage. Here’s a quick overview of each one:
Dwelling—Dwelling coverage protects your home and structures including interior walls, exterior walls, foundations, and cabinetry.
Coverage for other structures—This covers detached structures on your property including garages, fences, and sheds.
Personal property coverage—This type of coverage protects items within your home from covered damages. It usually pays for the depreciated value of the damaged item or pays to replace it with a new item.
Loss of use coverage—Loss of use coverage pays for living expenses if a disaster damages your home and you need to relocate temporarily.
Liability coverage—If you’re responsible for an accident that causes bodily injury or you damage someone else’s property, this covers the costs.
Coverage for medical payments to others—This covers the cost of medical bills if someone is injured on your own property.

Many home insurance providers offer endorsements to extend coverage to other types of catastrophic events. Popular endorsements include protection against identity theft expenses, earthquakes, and water backup.

Essentially, home insurance covers things that could happen like fires, storms, theft, or accidents. If one of these events occurs, you won’t be on the hook for home rebuilding expenses or other people’s medical bills. Home warranties cover things that will happen since even the best systems and appliances wear out. However, the breakdown must occur due to normal wear and tear for repairs to be covered.

Compare Homeowners Insurance Policies
Answer a few simple questions and we’ll take care of the rest.

Our Recommendations for Home Warranties and Home Insurance

A home warranty plan from a trusted provider could provide peace of mind that your appliance or system will be fixed after a breakdown. We’ll give our recommendations for the top home warranty companies as well as the best homeowners insurance company below.

Home Warranty Recommendations

Our research shows that American Home Shield and Select Home Warranty offer the best warranty coverage for most homeowners.

American Home Shield

American Home Shield (AHS) offers the best home warranty coverage overall. As an industry veteran, this provider has been serving homeowners for more than 50 years. AHS offers three comprehensive plans and allows customers to choose between a $100 and $125 service fee. AHS also covers types of damage that most providers lack including improper installation and repair, insufficient maintenance, rust, corrosion, and sediment. AHS offers coverage throughout the continental U.S. and in Hawaii.

Select Home Warranty

Select Home Warranty offers plans as low as $44 per month, which is cheap compared to the industry average of $44–$72 monthly. This provider also offers two free months of coverage and limited roof-leak repair, which most home warranty companies lack. Additionally, Select is available in all states other than Nevada, New York, Washington, and Wisconsin and offers discounts on multiyear plans.

Home Insurance Recommendation

We find Lemonade to be the best choice for homeowners seeking a home insurance policy.


If you’re looking for a top home insurance provider, we recommend Lemonade. Although this company is new to the home insurance industry, it’s created a unique insurance experience. For example, Lemonade allows individual endorsements on items like bikes and cameras while allowing you to set the amount of coverage for each item.

FAQ About Home Warranties

How long do home warranties last?

Most home warranty contracts must be renewed every year, though companies such as AFC Home Warranty allow homeowners to enroll in multiyear plans for a reduced yearly rate.

What isn’t covered by a homeowners insurance policy?

While homeowners insurance is comprehensive, it doesn’t cover everything. Below is a list of common items or events that aren’t covered by a homeowners insurance policy:

  • Earthquakes
  • Ordinance or law
  • Intentional loss
  • Governmental action
  • Mischievous acts
  • Flood damage and sewer backup
  • Slow leaks
  • Pest control

Who offers the cheapest homeowners insurance?

Amica, Lemonade, and Travelers gave us some of the most affordable home insurance quotes, priced below the national average of $109 per month.

Our Rating Methodology

We back up our home warranty ratings and recommendations with a detailed rating methodology to objectively score each provider. We conduct research by speaking with company representatives, requesting quotes, analyzing sample contracts from each company, and conducting focus groups and consumer surveys. We then score each provider against our review standards for coverage, value, trustworthiness and transparency, availability, and customer service to arrive at a final score out of 100.

To share feedback or ask a question about this article, send a note to our Reviews Team at reviews@thisoldhousereviews.com.