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(888) 658-0630Many homebuyers assume a home warranty and homeowners insurance provide the same type of protection. In reality, they serve different purposes and can work together to help protect a homeowner's investment.
Understanding the difference is an important part of helping buyers make informed decisions during the homebuying process.
What is a Home Warranty?
A home warranty is a service contract that may help cover the repair or replacement of certain covered home systems and appliances due to normal wear and tear, subject to the terms, conditions, exclusions, and limitations of the contract.
Unlike homeowners insurance, which protects against unexpected events such as fire or storm damage, a home warranty focuses on the mechanical systems and appliances homeowners rely on every day.
For buyers, a home warranty can provide added confidence when moving into a new home. For real estate agents, it can be a helpful resource for addressing concerns about potential repair costs after closing.
Home Warranty vs Homeowners Insurance
While both offer protection, they cover different types of situations.
Homeowners Insurance Typically Covers:
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Fire and smoke damage
- Storm and weather-related damage
- Theft and vandalism
- Personal liability claims
- Damage caused by covered disasters
Home Warranties Typically Cover:
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Mechanical failures due to normal wear and tear
- Heating and air conditioning systems
- Plumbing systems
- Electrical systems
- Covered kitchen and laundry appliances
Homeowners insurance helps protect against unexpected events, while a home warranty can help manage the cost of repairing or replacing covered systems and appliances that break down during everyday use.
What Do Home Warranties Typically Cover?
Coverage varies by provider and plan, but home warranties commonly protect many of a home's most important systems and appliances.
Home Systems
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Heating systems
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Air conditioning systems
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Electrical systems
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Plumbing systems
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Water heaters
Home Appliances
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Refrigerators
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Ovens and cooktops
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Dishwashers
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Washers and dryers
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Built-in microwaves
Many providers also offer optional coverage for additional items such as pools, spas, well pumps, septic systems, and other specialty features.
Homeowners should always review their contract carefully to understand coverage details, limitations, exclusions, and service fees.
Why Buyers Ask About Home Warranties
For many buyers, purchasing a home is one of the largest financial commitments they will ever make. Concerns about unexpected repairs are common, especially when purchasing an older home.
Some of the most common reasons buyers consider home warranty coverage include:
Budget Concerns
Major system and appliance repairs can be expensive. A home warranty may help reduce some of the financial uncertainty associated with homeownership.
Older Homes
Even well-maintained homes may have aging systems and appliances. Buyers often appreciate having an additional layer of protection when purchasing a property with older components.
First-Time Homebuyers
Many first-time buyers are unfamiliar with repair costs and maintenance responsibilities. A home warranty can provide added peace of mind during the transition to homeownership.
Unexpected Repair Costs
No homeowner wants to face a surprise repair shortly after moving in. Home warranties can help buyers feel more prepared for the unexpected.
How Agents Can Help Clients Evaluate Coverage
The most effective conversations about home warranties are educational rather than promotional. Real estate professionals can help clients understand their options by encouraging them to:
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Review what is covered and what is excluded
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Understand service fees and claim procedures
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Compare available plan options
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Consider the age and condition of home systems and appliances
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Evaluate their comfort level with unexpected repair expenses
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Read contract terms carefully before purchasing coverage
Learn More About Home Warranty Options
Home warranties are not the right solution for every homeowner, but they can be a valuable resource for many buyers and sellers navigating a real estate transaction.
To learn more about coverage options available through ARW Home PRO, visit our Realtor Home Warranty Plans page and explore solutions designed specifically for real estate professionals and their clients.