Home Warranty vs. Homeowners Insurance: What You Should Know
By Rose Morrison • Published July 16, 2024
Reviewed by Jack Gray, Roof Online Editor
Table of Contents
Many people consider homeownership a milestone. However, the joys of owning a place come with unforeseen problems and expenses. Whether it’s a leaky roof or a cracked window, unexpected damage could strain your finances and leave your home uninhabitable.
Whether you’re a homeowner, contractor, roofer, or property manager, you should know the difference between homeowners insurance and home warranties and how the policies can protect your property and livelihood. This guide will break down the differences and help you determine the best coverage.
What Does Homeowners Insurance Cover?
Certain events are outside your control, such as a major storm, fire or burglary. In these situations, homeowners insurance can turn out to be quite valuable, protecting you financially from the damage to your home and personal effects.
Dwelling Coverage
Dwelling coverage covers you up to your policy limit and is considered among the most crucial aspects of homeowners insurance. It pertains to structural damage to your home’s siding, windows, foundation, roof, floors, doors and walls. For example, windows may be damaged during windstorms or break-ins, while siding may endure dents from a hailstorm.
Unless your dwelling coverage specifies exclusions, your policy should reimburse you for any potentially destructive occurrence, often referred to as “perils” or “risks.” These threats could include lightning strikes, fires, flooding, freezing, explosions, and vandalism.
It is important for homeowners to have their dwellings inspected after a severe weather event. For instance, even if you have your roof inspected once or twice annually as recommended and know it’s in excellent condition, it may not hold up in heavy wind, rain, snow, or ice. There could be missing shingles you cannot see from the ground below, resulting in water damage and other expensive home repairs later.
A professional inspection makes filing an insurance claim much easier after intense weather. The inspector will provide a detailed overview of the damage and estimated repair costs for you to submit to your insurance provider.
Additional Coverage
Depending on your policy, homeowners insurance covers other aspects of household damage, including the following:
- Attached structures: Garages, fences, chimneys, decks, and porches.
- Personal property: HVAC systems, appliances, furniture, clothing, and other belongings.
- Loss of use: Living expenses — such as meals, parking, and hotel rooms — if the house is rendered uninhabitable.
- Personal liability protection: Financial protection if someone gets badly injured on the property.
- Medical coverage: Treatment costs and copays within the accident year for people — not household members — who get hurt on the property.
Always familiarize yourself with what your homeowner’s insurance policy covers and limits to ensure you choose the best plan for your personal situation.
What Protections Does a Home Warranty Offer?
A home warranty will cover repairs and replacements of your home’s major systems and appliances, typically due to wear and tear and not weather-related incidents. Often, it pertains to kitchen appliances, electrical wiring, and plumbing. However, a warranty could also apply to a roof, outdoor water heater, or air conditioning unit.
Home warranties are annual service contracts in which homeowners pay a monthly fee and a flat service rate for contracted work. These warranties also differ from the manufacturers’ warranties — the latter may only cover appliances for a certain amount of time. In contrast, home warranties typically provide protection regardless of the system’s age.
Your roof may also be eligible for a home warranty, which could vary depending on the materials used. For instance, cheaper shingles may be warranted for five to 10 years, while premium shingle warranties could last 40 years — also called a lifetime warranty. Most shingles are eligible for a 30-year warranty, the average life span of most roofs.
Although home warranties cover the essentials, homeowners can add other protections on the following home features:
- Pest control to prevent insect and rodent infestations
- Sump pump warranties to continuously drain water away from your property
- Pool and spa warranties for savings on maintenance costs for heaters, filters, and other components
- Well pump warranties to cover replacements or repair fees
Supplementary warranties are optional and might also cover seasonal HVAC maintenance, central vacuum systems and sprinkler systems, among other things.
Key Distinctions in Coverage
Homeowners can and should have a homeowners insurance policy and home warranty to safeguard their household from the inside out. Here are other key distinctions between the two types of coverage.
Coverage Triggers
Homeowners insurance will kick in immediately after you file a claim (which needs to be approved by the insurance company). The claim will protect you financially from damage caused by all sudden and spontaneous risks.
Conversely, home warranty coverage addresses a gradual deterioration of your home’s major appliances and systems — for instance, the dishwasher starts leaking or the air conditioner won’t blow cool air. While some contracts may consider sudden or accidental breakdowns, it isn’t commonly accepted under a home warranty.
Repairs vs. Replacements
The coverage amount for repairs and replacements caused by a natural disaster, weather event, or burglary depends on how badly damaged your home’s structure is. In some cases, insurance companies will reimburse all costs associated with the damage after you meet your deductible, such as for the roof or windows. Other times, you may be further responsible for part of the replacement costs.
A home warranty will cover a repair before a replacement. Remember, there may be limitations to how many service visits and repairs you are eligible for on an appliance or system before you are responsible for the out-of-pocket costs. Always check your plan to understand those limits so accrued expenses don’t surprise you.
Payment Structure
Homeowners insurance premiums are typically paid annually and are determined by your property’s location, market value, rebuild cost and claims history. On average, homeowners pay $782–$6,325 in annual premiums, depending on the state.
Home warranties typically cost $400–$600 for basic coverage or up to around $1,400 for more inclusive plans. You can also expect to pay service fees between $40 and $150 per call.
What About Pre-existing Conditions?
Homeowner’s insurance and home warranties are unlikely to cover pre-existing conditions, which is why homeowners must schedule inspections before obtaining a policy or purchasing a pre-owned home.
Suppose you buy a home with a roof nearing the end of its lifespan. According to your insurance policy, sudden damage resulting from a catastrophic event may not be eligible for repair or replacement. The damage would then be your responsibility.
Known and even unknown problems with your home may also negate a home warranty, meaning you won’t be covered for repairs. Even if a technician discovers the issue during a service call, they can deny you coverage.
Are Homeowners Required to Have Coverage?
In no state are homeowners legally required to obtain homeowners insurance or home warranty coverage. However, most banks and mortgage lenders mandate homeowners insurance for borrowing purposes.
Lenders must protect their investments. If your home burns down or gets damaged during extreme weather, homeowners insurance protects you and your lender against financial losses. Mortgage companies may also require you to obtain flood insurance if you live along a coastline susceptible to hurricanes and flooding. Purchasing earthquake coverage in California and other seismically active regions may also be necessary.
Even if you’ve paid off your mortgage, canceling your policy is risky. If a disaster occurs while you’re uninsured, you’ll be responsible for all costs.
What About My Roof?
Homeowners insurance and home warranties are important coverage considerations if you own
a house. Yet, you may still wonder whether these policies help you pay for your roof. Here are
two of the most common frequently asked questions about roof coverage.
Will Homeowners Insurance Cover My Roof?
Depending on the extent of the damage, homeowners insurance is likely to cover roof repairs or
replacements following extreme weather, fire, or other natural disasters. It certainly will address
secondary water damage, like mold growth. However, it will not cover general wear and tear
from aging.
Some policies won’t pay for storm-related damage if you live in an area prone to tropical
cyclones or tornadoes. Instead, your policy may have a separate, more costly deductible.
People living in coastal communities in the Southeast or Gulf Coast might especially consider
extending their coverage.
Will a Home Warranty Cover My Roof?
Most home warranties consider roof coverage an add-on to the existing contract and only
address general leaks. Your home warranty might also only include repairs to asphalt, clay, or
wood shingles or the part of your roof over occupied living space, such as bedrooms,
bathrooms, and the kitchen. Coverage and exclusions differ from warranty to warranty, so
homeowners should review the contract carefully.
Protect Your Property
Always read the fine print in your homeowner’s insurance policy and home warranty contracts. What’s covered by some policies may not be by yours. Consider your location and the potential threats to your home to decide whether you could benefit from additional coverage. Some policies are more expensive than others, but it’s better to be safe than sorry when disaster strikes.
About the Author
Rose Morrison is the managing editor of Renovated.com. She is a skilled researcher and specialty writer passionate about better building, construction, maintenance, and roofing. She regularly contributes to reputable sites like ISHN, The Safety Magazine, and Energy Central. Connect with Rose on LinkedIn.