What's the difference between a home warranty and homeowners insurance?

What's the difference between home warranty and homeowners insurance?

You want to know how home warranty and homeowners insurance differ and what each one covers. Both protect your home, but they work in different ways and cover different things.

Homeowners insurance protects against sudden damage from events like fires, storms, or break-ins. The insurance company pays to repair or replace your home and belongings when covered damage happens. You typically pay a premium every month or year, plus a deductible when you file a claim.

A home warranty covers the cost to repair or replace home systems and appliances that break down from normal wear and tear. That includes things like your HVAC system, water heater, refrigerator, or washing machine. You pay an annual fee upfront, then a service call fee each time you need a repair.

Most lenders require homeowners insurance before closing, but a home warranty is optional. Some sellers offer to pay for a home warranty as part of the purchase agreement. You can also buy one after closing if you want coverage for appliance and system breakdowns.