Home insurance vs. home warranty

Homeowners insurance and a home warranty sound similar but cover almost entirely different things. Many homeowners benefit from both.

Homeowners insurance

Covers sudden, accidental damage to your home and belongings — fire, theft, wind, hail, water damage from burst pipes, liability. Required by most mortgage lenders.

Home warranty

A service contract that covers breakdowns of major systems and appliances due to normal wear and tear — your HVAC, water heater, refrigerator, washer/dryer, etc. Optional.

Quick comparison

• Trigger: Insurance = unexpected event. Warranty = normal aging breakdown.
• What's covered: Insurance = structure, belongings, liability. Warranty = systems and appliances.
• How you use it: Insurance = file a claim. Warranty = request service call.
• Required? Insurance = typically yes (by your lender). Warranty = never required.

If your appliances or HVAC are aging, a warranty might give peace of mind. If you're underinsured on your home's rebuild cost or liability, that's a much bigger gap to close first.