Understanding home warranty vs. home insurance

Knowing the difference between home warranty and home insurance can help homeowners make informed decisions when it comes to protection plans. Home insurance covers the repair of structural damages ensuing from natural disasters, fire, and flood. It also protects homeowners from liability issues in the event of an injury on the property.

Home warranty coverage protects homeowners from the expenses of appliance breakdowns. A typical home warranty plan:

Covers the repair of kitchen, plumbing, electrical, and other appliance problems that arise from old age, malfunctions, or system failures.
Covers the replacement and installation of appliances that cannot be repaired.
Includes an unlimited number of service requests within the period of the contract (typically one year).
Unlike most insurance plans, a home warranty plan does not penalize or raise your rates if used.

A service fee determined by your contract must be paid before a repair technician or replacement is sent to your home. A home warranty plan cannot be used in lieu of home insurance. Do your research and contact a home warranty company near you to get all your questions answered before making a decision.

4 ways a home warranty can help

Home warranty plans can help new homeowners, as well as homeowners with high-end appliances, keep their homes in working order. The benefits of a home warranty plan include:

Cost. New homeowners who do not have the funds or savings can stay on top of repairs with a home warranty plan. Home warranty companies charge a fee for coverage that is paid upfront or in installments over the course of a year. A service fee is required in addition when a request is made. The cost of the appliance repairs and replacement will be paid for under the home warranty coverage.
Efficiency. Homeowners who do not have the time to find a contractor can utilize their home warranty company to complete the search.
Peace of mind. Sellers and buyers can rest assured their investment is covered during an emergency.
Customization. The appliances and systems covered under a home warranty plan vary. Homeowners can customize their plan to provide as much or as little coverage as they need for their home.

Which appliances are covered by my home warranty?

Many home warranty plans cover the main appliances in a home. A home warranty is offered to the buyer during the sale to protect the buyer from experiencing any unexpected expenses after the sale is finalized. However, a home warranty is not just for those who have recently purchased a home. It also protects older and high-end appliances. Standard appliances typically covered for repairs or replacement in a home warranty plan include:

Kitchen appliances, e.g. refrigerators, ovens, dishwashers
Heating and air conditioning units
Washers and dryers
Hot water heaters
Electrical
Plumbing
Roofing

Home warranty coverage varies by company. Many home warranty plans pay in cash if the service technicians are unable to repair or replace an appliance. If you want a plan that protects specific items, such as those found in a garage or guest house, you may need to negotiate for those to be added to the plan before signing a contract.

Read BBB's tips on buying a home warranty.

Check out BBB's Home HQ for more home related information.

Home Warranty Plans Near You

Home warranty companies near you

Provide your location

Accreditation and Ratings Overview