When buying or owning a home, you're bound to come across a variety of terms that sound similar but serve very different purposes. Two of the most commonly confused are home warranty and home insurance. While both are designed to protect your investment, they do so in distinct ways. Understanding the difference can help you avoid costly surprises and ensure you’re properly covered.

What Is Home Insurance?

Home insurance, also known as homeowners insurance, is a policy that covers your home and belongings in case of unexpected events like fire, theft, vandalism, storms, or other natural disasters. Most mortgage lenders require you to have home insurance before they’ll approve your loan.

What it covers:

• Structural damage to your home (from covered events)

• Personal belongings (furniture, electronics, etc.)

• Liability protection if someone gets injured on your property

• Additional living expenses if you’re displaced due to damage

Example:

If a tree falls on your roof during a storm or a pipe bursts and floods your living room, home insurance will likely cover the repair costs (minus your deductible).

What Is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of specific home systems and appliances that break down due to normal wear and tear. It’s optional but can offer peace of mind—especially for new homeowners or sellers trying to sweeten a deal.

What it covers:

• Major appliances (oven, dishwasher, refrigerator, etc.)

• Systems like plumbing, electrical, and HVAC

• Some plans even include coverage for garage doors, ceiling fans, or washers/dryers

Example:

If your water heater breaks down or your air conditioning stops working, a home warranty can help cover the cost to repair or replace the item.

Key Differences at a Glance

Should You Have Both?

In many cases, yes. Home insurance is essential for protecting against big-ticket losses and disasters. A home warranty, while not required, can save you money and stress when dealing with common household breakdowns—especially in older homes where systems may be aging.

Final Thoughts

Buying a home is one of the biggest investments you’ll ever make. While home insurance protects you from the unexpected, a home warranty protects you from the inevitable wear and tear of daily life. Together, they create a comprehensive safety net that helps you sleep a little easier at night.