As a homeowner, protecting your investment is a top priority — but knowing exactly what kind of protection you need can be confusing. Homeowners insurance is a necessity for anyone who has a mortgage on their property – but do home warranties serve the same purpose? The fact is that while they may sound similar, the two products serve very different purposes. Understanding the difference can help you avoid unexpected costs and choose the right overall protection for your home.
First Things First: Homeowners Insurance
Homeowners insurance is a policy that protects your home and belongings from unexpected and potentially catastrophic events – such as fires, storms, theft, vandalism, or water damage from a burst pipe. If a tree falls on your roof during a hurricane or your basement floods due to a plumbing failure, homeowners insurance can help cover the cost of repairs or replacements.
Most policies also include liability coverage, which protects you if someone is injured on your property. For example, if a delivery driver slips on your icy walkway and gets hurt, your homeowners insurance can help cover medical bills or legal costs.
Here are the key areas that your insurance policy typically covers:
- Structural damage to your home
- Personal belongings inside the home
- Additional living expenses if your home becomes uninhabitable
- Personal liability for accidents or injuries on your property
Homeowners insurance is required by mortgage lenders, and for good reason—it’s a financial safety net for some of life’s biggest disasters.
What are Home Warranties?
A home warranty, by contrast, is a service contract that helps cover the repair or replacement of your home’s major systems and appliances when they break down due to normal wear and tear. It’s not insurance—it’s a protection plan for the things you use every day. If your HVAC system suddenly stops working in the middle of summer, or your dishwasher breaks down after years of use – a home warranty can help pay for the cost of fixing or replacing those items.
Typical items covered by a home warranty include:
- HVAC systems (heating and air conditioning)
- Plumbing and electrical systems
- Kitchen appliances (stove, refrigerator, dishwasher)
- Water heaters and garbage disposals
Home warranties are optional, but many homeowners—especially those with older homes or appliances—find them helpful for budgeting and avoiding unexpected repair costs.
While both home insurance and home warranties offer valuable protection, they serve very different purposes. Homeowners insurance is required by mortgage lenders and is designed to cover large, unexpected events such as fires, storms, or theft. It typically does not cover appliances or systems that break down from everyday use, but it does protect the structure of your home, your personal belongings, and offers liability coverage if someone is injured on your property.
On the other hand, a home warranty is optional and functions more like a service contract. It covers the repair or replacement of items like your HVAC system, plumbing, electrical systems, and major appliances that fail due to normal wear and tear. However, it does not cover damages from natural disasters or provide liability protection.
In Short: Homeowners insurance helps with the big, unexpected losses, while a home warranty helps manage the smaller, more routine breakdowns that come with everyday living.
Do You Need Both?
Home insurance and home warranties complement each other. Insurance protects your home’s structure and your belongings from disasters, while a warranty helps cover the smaller, more frequent breakdowns of your home’s critical systems and appliances. Together, they offer more complete peace of mind—whether you’re a first-time homeowner or a seasoned pro.
Buying and owning a home is a major milestone—but it also comes with responsibility. Understanding what homeowners insurance and home warranties cover can help you make smarter choices, avoid costly surprises, and protect the investment you’ve worked hard for.
Have questions about choosing the right coverage or whether a home warranty is right for you? Call Anderson & Associates Insurance Group today to set up a consultation.
