home insurance

Home Insurance vs Home Warranty: Why You Need Both

Protection for You and Your Home

Insurance and Warranty are two words often mistaken for each other. They mean almost the same thing since they are a form of protection; however, they are different, especially regarding home management. Home Insurance and Home Warranty are two separate concepts that every homeowner must know, but unfortunately, there aren’t many resources online to give a sense of direction. This article explains both terms, differentiating them and explaining why they are important.

What is Home Insurance?

Home insurance is a mortgage-based property insurance that covers a home’s physical structure and the homeowner’s belongings. It offers solid protection against property loss or damage due to some factors, including wind, fire, theft, vandalism, and anything destructive. It also covers personal injuries sustained on the property.

Ideally, there are four coverages on home insurance.

  • The Home Structure Coverage: It covers everything on the property destroyed or damaged by external factors. The repair or rebuild cost is established based on the number of damages done to the home’s structure.
  • The Personal Property Coverage: It covers personal property on the building destroyed or damaged by fire, wind, or any peril. It is often claimed, especially in the case of valuable items, such as furniture, jewelry, clothes, etc.
  • Liability Coverage: It covers lawsuits that may come from injuries or damage sustained due to an individual’s or other people’s presence on the property – for instance, a dog attack on a neighbor. It also covers medical bills.
  • Other Living Expense Coverage: It covers an individual’s living expenses while spending time outside their property because it recently got damaged, robbed, or destroyed.

Before claiming home insurance, an individual must have registered with a homeowner insurance company and paid between $300 to $1000 annually. This home insurance cost varies from one company to another based on their policies.

After filing a claim to get a check premium, the insurance company establishes costs based on some factors. They include location, home insurance claims history, marital status, credit score, the value of vandalized or damaged items, home condition and size, etc.

Why is Home Insurance Important?

Home Insurance gives good coverage over destroyed or vandalized buildings and personal property. It saves individuals the stress of spending their hard-earned money to fix the damage. It also saves people from impromptu or emergency spending caused by various tragedies.
The insurance company only needs to set up an open peril contract, and everything is set up.

What is Home Warranty?

A home warranty protects household appliances and devices such as dryers, washers, hot water heaters, and furnaces. It also covers repairs and replacements for HVAC, plumbing, and electrical systems for a fee. It is more precise and is often covered by a home warranty company.

When there is a problem with an appliance or household system, the home warranty company sends a repairer or technician over to diagnose and solve the issue. The only fee that will have to be paid is for the service call.

Before claiming home warranties, an individual must pay an annual premium between $350 to $650 to the company. When a problem arises, the company fixes it from this premium. Warranty coverage may range between $1,500 to $15,000 per year.

The clause with this protection program is that a home warranty starts immediately after moving into a new home. On the other hand, it takes between 15 to 30 days before it becomes active on an existing house.

Why is Home Warranty Important?

A home warranty is important for a few reasons.

It saves people the trouble of maintaining and repairing appliances and household devices regardless of age. It also gives individuals an opportunity to invest in good household systems.

What are the Differences Between Home Insurance and a Warranty?

Home Insurance and Home Warranty share similar functions, i.e., protection, but the contract costs and coverages differ.

Contract Costs

The contract cost is the first difference between Home Insurance and a Home Warranty policy. The idea of both is to pay a premium and also get a deductible in case a problem arises. However, one would realize that the Home insurance premium and deductible cost are higher than the Home warranty. The reason is that the former settles more expenses than the latter.


Co-joined with the contract cost is the coverage, which also differentiates home insurance and warranty. Home insurance coverage is for expenses around obvious damages, vandalism, or theft on a property and medical expenses on a wounded individual on a property. On the other hand, a home warranty policy is designed to settle repair and replacement costs of certain home devices, systems, or appliances.

Home Requirement

One more thing that differentiates both protection programs is the home requirement. According to U.S. housing, no law says homeowners require home insurance, but traditional banks and lending institutions recommend it. That means houses (including condos, duplexes, and townhouses) on mortgage need it. A home warranty, however, may not be required – it is an optional cause.

Why Do You Need to Have Both?

Both home protection programs are focused on effective household management. They both ensure that individuals living on a property are covered on major expenses, which may be planned or unplanned (i.e., impromptu). That means the building and the people living within it are protected from external factors such as vandalism, theft, or damage; the internal systems are also covered to avoid spending much on repair or maintenance.


Judging from what has been explained above about home insurance and home warranty, it is obvious that both protection programs are crucial. One helps against property or personal belongings, while the other covers home equipment and systems. They can work interdependently to help homeowners save money and time on household management. To start, join any home insurance or home warranty company today. Get a quote on yearly premiums and deductibles once the company has reviewed the home’s value using certain metrics.