Skip to contentNerdwallet icon

Home Warranty vs. Home Insurance: Are They the Same?

Home warranties and homeowners insurance cover different types of problems.

Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners.

Updated · 5 min read
Whitney Vandiver
Written by 
Lead Writer & Content Strategist
Amanda Derengowski
Edited by 
Senior Editor & Content Strategist
SOME CARD INFO MAY BE OUTDATED

This page includes information about these cards, currently unavailable on NerdWallet. The information has been collected by NerdWallet and has not been provided or reviewed by the card issuer.

Nerdy takeaways
  • A home warranty covers wear and tear, while home insurance pays for issues caused by things such as fire or storms.
  • Homeowners insurance is usually required by mortgage lenders, and home warranties are optional.
  • Depending on your location, homeowners insurance can be much more expensive than a home warranty, according to NerdWallet’s analyses of homeowners and home warranty costs.
  • You can have both homeowners insurance and a home warranty. You don’t have to choose between them.
Home warranties and homeowners insurance cover different types of problems.
A home warranty is a service contract for home systems and appliances that need to be repaired or replaced due to everyday use. On the other hand, homeowners insurance covers structures, systems, appliances and belongings — but only after sudden, unexpected events like theft, fire or extreme weather.
Homeowners insurance usually requires you to pay a deductible, while a home warranty charges a service fee. They are generally regulated differently as well.
Knowing the difference can help you make sure you have the coverage you expect and need.

Comparing them side-by-side

Home warranties repair your home’s systems and appliances, while home insurance covers loss or damage from unexpected events. Here are the main differences between them.
Plan
Home Warranty
Home Insurance
Type of coverage
Service contract.
Insurance.
Required?
No.
Usually required by most mortgage lenders.
Covered causes
Normal wear and tear.
Certain perils, such as theft or some natural disasters.
What's covered?
  • Household systems such as plumbing.
  • Household appliances such as a refrigerator.
  • Pools for an extra fee.
  • Guest units, depending on your plan.
  • Electronics, depending on your plan.
  • Structures on your property.
  • Household systems such as plumbing.
  • Household appliances such as a refrigerator.
  • Personal belongings, including electronics.
  • Liability if anyone is injured on your property.
Service fee
Yes (on some plans).
No.
Deductible
No.
Yes (usually customizable).

How they may help you

A home warranty repairs major appliances and household systems when they break down because of everyday use. It isn’t a type of insurance, and home warranties aren’t regulated in the same way as insurance companies. If your water heater stops working or your air conditioning unit isn’t running properly, a home warranty might pay for a technician to fix the problem. It may also replace it if the appliance is beyond repair.
Homeowners insurance is actually insurance and has a broader scope. It covers appliances, household systems, your belongings and the structure of the building. Home insurance also covers detached structures, such as sheds or fences.
Unlike a home warranty, home insurance pays for damage from sudden, unexpected events like fires, windstorms and break-ins. Homeowners insurance policies specifically exclude problems due to wear and tear.

Side-by-side: when they cover something

Home warranties and home insurance policies apply coverage in different situations.
When a home warranty applies
When homeowners insurance applies
It applies when a well-maintained appliance or system that's included in a plan breaks down due to normal wear and tear.
Examples are the heat pump in your heating system wearing out or your oven no longer heating properly.
It applies when your home's structure, systems, appliances or your belongings are damaged because of certain unexpected events.
Examples include a leaking dishwasher flooding your kitchen and ruining the floor or someone breaking into your home and stealing items.
Not sure if a home warranty is worth it? Read our article to decide.

Compare home insurance quotes

Find the best coverage at the right price — and save with a new policy
Architecture, Building, Cottage
Explore home insurance rates

When coverage starts

Most home warranty plans require customers to wait 30 days before they’ll pay for a repair. This helps prevent fraud by keeping people from signing up to fix a problem that just happened.
Homeowners insurance policies usually take effect more quickly. In some cases, a policy can start immediately to cover your home the same day you purchase the new home insurance.

How much they cost

For both home warranties and homeowners insurance, the more coverage you choose, the higher the cost.

Cost of a home warranty

A home warranty costs an average of $876 per year in 2026 but can be more than $2,000 a year for some plans.
Home warranties usually charge a service fee that you’ll pay each time a technician comes to your house, even if your warranty company ends up refusing to pay for repairs. These service fees can range from $65 to $200 per service call.
Most home warranties also have limits on how much they’ll pay for repairs, which means you have to cover the remaining cost for large repairs. For example, if your air-conditioning unit needs a new compressor, it could cost more than $1,000 for certain types. If your home warranty covers up to $500 of that cost, you’re responsible for the remaining $500 or more.

Cost of homeowners insurance

Homeowners insurance, on the other hand, averages $2,490 per year. It can be as low as $2,415 (or $1,940 with a military insurer) to more than $4,000 annually, according to NerdWallet's home insurance cost analysis.
Most homeowners policies have a deductible, which is the amount you have to pay before your insurer will cover your claim. For example, let’s say a storm knocks out your air-conditioning unit, and it needs $2,100 worth of repairs. With a $1,000 deductible, your policy would cover $1,100 after you pay $1,000 out-of-pocket.
Check out our homeowners insurance calculator to estimate your cost.

Reasons you might pay more out-of-pocket

You might also have to pay more toward a repair than just your service fee or deductible in some scenarios, such as:
  • The problem is caused by something that your contract or policy doesn’t cover. For example, if a flood damaged exercise equipment you had set up in your basement, a home insurance policy that excludes damage from outside flood waters wouldn’t pay to replace the equipment.
  • The cost to repair the damage or replace the item is above your coverage limit. For example, let’s say your steam furnace stopped working. If your home warranty plan had a limit of $1,500 to pay toward repairs, you’ll be on the hook for any remaining costs beyond that limit. 
  • You want a more expensive replacement than what the home warranty company is willing to purchase. For example, if your home warranty plan will pay up to $1,000 to replace your basic fridge, you’ll have to pay the difference in cost if you want a more expensive refrigerator.

NerdWallet's Editorial Team Picks for Best Overall Home Warranties

See which home warranties our writers and editors think are the best options for homeowners.
Clothing, Footwear, Shoe
Explore the Nerds' Top Picks

FAQs

Do I need homeowners insurance and a home warranty?
Some mortgage lenders require home insurance, but getting a home warranty is up to you. You might want the extra coverage of a home warranty if:
  • Your home’s systems and appliances are older and no longer covered by manufacturer warranty.
  • You’re not able to repair your systems and appliances yourself.
  • You have high-end systems and appliances.
  • You can be flexible about who repairs your items and the make/model of replacements.
Can I have both home insurance and a home warranty?
Yes, you can have homeowners insurance plus a home warranty. Keep in mind though that they generally cover different situations, so you likely wouldn’t use both in the same incident or accident. Be sure to read the coverage details carefully and check in with your providers to understand when and where you should put in a claim.
Is home insurance more expensive to buy than a home warranty?
Yes, homeowners insurance is more expensive than a home warranty, but it provides more coverage. A home warranty covers your home’s systems and appliances, while home insurance covers your entire property including structures, personal possessions and liability.
Will a mortgage company let me buy a home warranty instead of home insurance?
No, your mortgage lender won’t let you replace homeowners insurance with a home warranty. In order to protect its investment when it lends you money, your mortgage lender needs you to cover your entire home against major events like fire, vandalism, theft and extreme weather.
Does a home warranty or homeowners insurance cover foundation issues?
Home warranties usually don’t cover foundation issues. This is because a foundation is part of your home’s structure and not part of your home’s systems or appliances. Home insurance, on the other hand, may cover foundation repairs if the damage was caused by covered perils in your policy such as falling trees, wind, fire or tornadoes.
Does my home warranty or home insurance pay for storm damage?
If you’ve had storm damage, such as hail or falling branches damaging your roof, your homeowners insurance may reimburse your loss if the storms are considered a covered peril in your policy. Home warranties only cover normal wear and tear of the home’s systems and appliances, so they would not cover storm damage.
Article sources
NerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines.
    Back to top
    More like this
    How to Move in 2026HomeownershipMortgages
    Related articles
    Chart, Plot, Device
    The Nerds Explain Home Warranties
    Whitney Vandiver's profile picture
    By Whitney Vandiver
    What Does a Home Warranty Cover?
    Whitney Vandiver's profile picture
    By Whitney Vandiver
    Adult, Male, Man
    How Much Does a Home Warranty Cost in 2026?
    Whitney Vandiver's profile picture
    By Whitney Vandiver