Home warranty versus home insurance

A family of four unpacking a moving box


Your home is probably the largest investment you and your family will make. It’s the center of your family’s life and you want to be sure it’s protected from both daily wear and tear and major damage.

But your homeowners insurance policy doesn’t cover everything. That’s why it’s essential to invest in both a homeowners policy and a home warranty plan. Together they offer comprehensive coverage for your family’s largest asset.

But why do you need both plans? What does each plan cover? And what’s the difference between them?

But why do you need both plans? What does each plan cover? And what’s the difference between them?


What do homeowners insurance policies cover?

The first difference between an insurance policy and a warranty plan is that homeowners insurance is usually mandatory whereas a warranty plan isn’t. That’s because they cover different things..

Before issuing you a mortgage, a bank usually requires you to purchase a standard homeowners policy and retain it throughout the life of the mortgage.

Homeowners insurance covers four primary areas of your home:

  1. Personal property that could be stolen or damaged
  2. The interior of your home
  3. The exterior of your house
  4. General liability that covers you if someone gets injured on your property

An insurance policy protects you from unexpected perils ranging from theft of property to major damage brought on by fires, floods or other natural disasters. This is the big stuff.

How are homeowners insurance claims paid?

In the (hopefully) unlikely event that your basement flooded after a big storm or an earthquake damaged the structure of your home, an insurance adjuster would come to your house to assess the damage and fill out a claim. After the claim is approved, the insurance company would calculate the cost of the total repair, subtract the amount of your deductible, then issue you a payment to cover the costs.

It’s obviously very important to protect your house from these major disasters. But what about the more common failures incurred by daily wear and tear of the appliances and systems in your home?

That’s where a homeowner’s warranty plan comes in - it covers you for the things a homeowner’s insurance policy doesn’t cover.


What do home warranty plans cover?

Home warranties generally cover failures incurred from daily wear and tear to both your home’s major appliances and systems such as:

  • Major kitchen appliances like your fridge or built-in microwave
  • Clothes washer and dryer
  • Hot water heater
  • HVAC systems like your air conditioner
  • Plumbing and electrical systems
  • Smart home system integrations

With a Cinch Home Services plan, you pay a monthly fee for our services. You set the price and it can range from $45-$65 per month. We offer flexible home protection plans that fit your specific needs — you can choose an Appliances Plan, Built-in Systems Plan or Complete Home Plan and add on additional items, such as a pool or well pump.

While home insurance policies are typically required for homeowners, a home warranty plan is never mandatory. But since insurance policies don’t cover costs for daily wear and tear to the appliances and home systems you rely on, warranty coverage can save you a lot of trouble and money.

This is especially true for a first-time home buyer who might be under even more financial strain when purchasing their first house than someone who is upgrading to their next home. Home warranty coverage not only fills the gaps in coverage left by your insurance policy, but it also protects you from unpredictable upfront costs of appliance repair or replacement.

How are repairs and replacements handled under home warranties?

Here’s how it works: to purchase a home warranty you sign a service contract that usually lasts about a year, just as you would for an insurance policy. Your warranty company will let you choose whether to pay the annual sum or pay in small monthly installments.

When a covered item breaks, you pay a one-time service fee (or deductible) for one of the qualified service providers to come to your home to fix the problem. And that’s it.

Once you request service, the qualified service partner will assess the damage and either repair or replace your equipment or appliance. After the technician fixes the issue, you pay your fee and get a 180-day workmanship guarantee, which means we’ll stand by the repair for six months or come back and fix it at no additional cost.


Why is having both a home warranty plan and homeowners insurance the best scenario?

As a homeowner, it’s important to understand the differences between warranty plan versus insurance policy coverage to ensure you’re prepared for all scenarios associated with damage to your home.

A homeowners insurance policy and your warranty plan work together when things go wrong. Of course, if the roof blows off your house, you’ll be in serious trouble and will need to call your insurance provider immediately to help you deal with the damage and provide coverage.

But if your hot water heater suddenly goes on the fritz, it can be extremely stressful and disturbing to your family’s busy life too. A warranty company provides coverage for this kind of far-more-likely disaster.

Water heater repair or replacement can be a major expense and could seriously throw off your monthly budget if you had to handle the entire upfront cost yourself. A home warranty company spares you that financial burden.

That’s why millions of homeowners across the country have warranty plans from companies like Cinch in addition to their homeowners insurance policy. Having both types of plans provides you with peace of mind, knowing your home and your family are taken care of whether day-to-day issues or completely unexpected problems arise.

Do you need both a home warranty and home insurance? What does each plan cover? And what’s the difference between them? Visit the Cinch site to learn more.