Home warranties and homeowners insurance get confused because both can help pay for problems in your home. They cover very different events, and one does not replace the other.
Homeowners insurance covers sudden damage
Insurance pays for damage from covered perils such as fire, wind, hail, theft and certain water damage, plus liability if someone is hurt on your property. Mortgage lenders require it.
A home warranty covers breakdowns
A home warranty is a service contract. When a covered system or appliance fails from normal wear, such as an aging water heater or a dishwasher that stops draining, you pay a service fee and the company sends a technician to repair or replace it, subject to the contract's limits.
| Situation | Insurance | Warranty |
|---|---|---|
| Storm tears off part of the roof | Usually covered | No |
| 12-year-old AC compressor fails | No | Often covered |
| Kitchen fire | Usually covered | No |
| Refrigerator stops cooling | No | Often covered |
Who benefits from a home warranty?
Warranties appeal most to owners of homes with older systems, new buyers without a repair fund, and landlords who want one number to call. If your systems are new or still under manufacturer warranty, you may get less value.
Read the limits
Every warranty has coverage caps, exclusions and a waiting period. Check the per-item limits on HVAC and plumbing, and what the contract says about pre-existing conditions and maintenance records.
Compare home warranty plans and service fees.
Compare plansThis guide is general information, not financial, legal, tax or insurance advice. Terms vary by provider and state.