Home warranty vs. home insurance: what you should know

Key tips to remember

  • Know the difference
  • Having both is the best case scenario
Home Warranty

As a homeowner, it's always a good idea to protect your home from possible damage, whether it's caused by extreme weather or daily wear and tear. Investing in both home insurance and a home warranty plan is essential, as they cover different types of damage. If your roof were to start leaking or your heater stopped working in the middle of the winter, you would need an insurance policy and a home warranty to get these problems fixed and create a safe and comfortable living environment for your family.

Why do you need both plans, and how do they differ? This guide should help make the difference clearer.

Home insurance policies

The main difference between a home warranty (or home protection plan) and home insurance policy is what they cover. Home insurance is often mandatory when homeowners buy a new house. The bank will usually require you to purchase a policy before issuing a mortgage and expect you to keep the policy for the length of the mortgage.

Home insurance covers four primary areas of the home, including personal property that could be stolen or damaged, the interior and exterior of your home and general liability that occurs if someone were to be injured on your property. In addition to theft, home insurance policies will cover costs for damages caused by perils like fires, floods and other natural disasters. You would need an insurance policy to cover costs if your home ever undergoes serious water damage from a natural disaster.

If your basement were to flood due to a storm, or if an earthquake were to ruin the structure of your home, an insurance adjuster would come to your house and fill out a claim for repair of any damaged belongings. After the claim is approved, your insurance company would issue a payment after subtracting the amount of your deductible from the total balance to cover the cost of the repair.

Home warranty plan

While home insurance policies are usually required for homeowners, home warranties are never mandatory. But because insurance policies don't cover costs for damage as a result of daily wear and tear, home warranties can save you a lot of trouble and money because most home equipment and appliances will eventually require costly repairs. In fact, a recent Consumer Reports customer survey found that 1 in 5 new household appliances will require fixing soon after they're purchased.

When purchasing a home warranty, you sign a service contract that usually lasts about a year,  just as you would for an insurance policy. Warranties generally cover essential home equipment, such as your plumbing, major kitchen appliances, HVAC systems, clothes washer and dryers and electrical, when they stop functioning properly due to age or frequent use.

At Cinch, we offer home protection plans that fit your specific needs with the ability to choose an Appliance plan, Built-in Systems plan or Complete Home plan as well as cover additional items, such as a pool, well pump, etc. 

With a Cinch plan, you pay a monthly fee for our services — you set the price and it can range from $100 to $150. Then, when something breaks, you pay a one-time service fee (or deductible) for our service partners to come to your home to fix the problem. And that’s it. Our plans cover damage incurred from daily wear and tear to both your home’s appliances and major systems. Once you request service, we send one of our 40,000 qualified service partners to 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.

While both home warranties and insurance policies protect your home, they do so in very different ways, so it's important as a homeowner to understand these differences to ensure you've prepared your home. They may cover different things, but both types of plans provide you with peace of mind and assurance that you, your home and your family are taken care of when even the most unexpected problems arise.


The information in this article is intended to provide guidance on the proper maintenance and care of systems and appliances in the home. Not all of the topics mentioned are covered by our home warranty or maintenance plans. Please review your home warranty contract carefully to understand your coverage.