Understanding the Difference Between Home Warranty vs. Home Insurance

This blog was provided by our expert finance partners at Pulte Mortgage™.

When you purchase a new home and are looking for the best way to safeguard it, understanding the difference between two key components of home protection – a home warranty vs. home insurance – is essential. While these terms are often used interchangeably, they serve distinct purposes and offer different levels of coverage. Knowing how they differ can help you make informed decisions about protecting your new home.

Summary:

• What Is the Difference Between Home Warranty and Home Insurance? 

  • Home Warranty: Benefits, Coverage, and Cost 

  • Home Insurance: Benefits, Coverage, and Cost

• Home Warranty vs. Homeowners Insurance: Do You Need Both? 

• Conclusion

What Is the Difference Between a Home Warranty and Home Insurance? 

A home warranty is a service contract that covers the repair or replacement of certain appliances and systems within your home, like your HVAC, electrical, and plumbing systems. It's designed to protect homeowners from unexpected repair costs due to normal wear and tear.

On the other hand, home insurance is a policy that covers your home and personal property against damage or loss due to covered perils such as fire, theft, vandalism, or natural disasters. It can also provide liability coverage in case someone gets injured on your property. While a home warranty protects the inner workings of your home, home insurance is designed to safeguard your home from external events and accidents.

Home Warranty: Benefits, Coverage, and Cost

A home warranty can offer protection by covering the cost of repairs or replacements of major home systems and appliances. The specific coverage provided by a home warranty varies, depending on the provider and the plan you choose, but it typically covers the following:

• Heating and cooling systems: HVAC units, furnaces, and air conditioners

• Plumbing systems: Water heaters, pipes, and faucets

• Electrical systems: Wiring, outlets, and switches

• Major appliances: Refrigerators, stoves, ovens, dishwashers, and garbage disposals

There are several benefits of a home warranty, including:

• Peace of mind: Knowing that your major systems and appliances are covered can offer peace of mind and reduce stress.

• Cost savings: Home warranties can help you avoid unexpected repair or replacement costs, potentially saving you money in the long run.

• Convenience: Many home warranty companies offer 24/7 emergency service and can arrange for repairs or replacements at your convenience.

The cost of a home warranty generally depends on your location and builder, but it can average anywhere between $400 to $900 annually.

Home Insurance: Benefits, Coverage, and Cost

Home insurance offers financial protection against property damage and liability due to covered perils, such as fire, theft, natural disasters, and accidents. Home insurance policies typically include coverage for the following:

• Dwelling: The structure of your home, including the walls, roof, and foundation

• Contents: Your personal belongings, such as furniture, electronics, and clothing

• Liability: Covers you if someone gets injured on your property or if you cause property damage to others

The specific coverage provided by your home insurance policy can vary depending on the insurer and the plan you choose. Reviewing your policy carefully to understand your coverage limits and exclusions is critical.

Here are the primary benefits of home insurance:

• Financial protection: Home insurance can help you recover from losses due to unexpected events.

• Peace of mind: Knowing that your home and belongings are protected can offer peace of mind.

The cost of homeowners insurance varies based on factors like your home’s value, location, and the amount of coverage you choose. The average cost of home insurance in the United States ranges from $1,117 to $2,950 per year, depending on the amount of coverage needed. 

It’s important to note that most mortgage lenders will require homebuyers to take out a home insurance policy on their property before closing.

Home Warranty vs. Homeowners Insurance: Do You Need Both? 

When deciding whether to purchase a home warranty or home insurance, it's important to consider your individual needs and budget. Many homeowners find that having both a home warranty and home insurance offers the most comprehensive protection for their home.

Pulte Insurance Agency™ can help you find the right home insurance policy to protect your new home. As a trusted partner of Pulte Homes®, our agency offers competitive rates and personalized service.

Conclusion

In summary, both home warranty and home insurance offer valuable protection, but they serve different purposes. Home warranties typically cover the repair or replacement of major systems and appliances within your home, helping give you peace of mind and avoid unexpected repair costs. On the other hand, home insurance offers coverage for property damage and liability. Being aware of the difference between the two options can help you choose the right protection plan for your home.

Explore new construction homes today or browse more Pulte® blogs.

Written By: Meagan Rochard, Financial Services Writer 

Last Updated:  5/7/25