Learn the Differences Between a Home Warranty and Homeowners Insurance

Protecting your dwelling from disaster, theft, and everyday wear and tear can be an exhausting process, which is precisely why homeowners insurance and home warranties were created. But what’s the difference between them?

Covering your possessions and your house itself in case something unexpected happens is the main reason a homeowners insurance policy is essential—and most mortgage lenders will require you to have one.

Having a repair professional just a call or click away is one of the reasons people choose to sign up for a home warranty plan—but this coverage is optional for an additional cost.

Here’s what you need to know about home warranties and insurance, and why many people choose to have both.

Protect the inside with a home warranty.

A home warranty is designed to protect the appliances and systems inside the home. The warranty is essentially a paid contract between you and the home warranty company that ensures that covered appliances and home systems will be repaired or replaced in a timely manner and at a reduced rate.

The cost and coverage for a home warranty plan* varies by company, state and even zip code, but here are some of the appliances that may be included:

• Dishwasher
• Oven/cooktop
• Built-in microwave
• Trash compactor
• Garbage disposal
• Clothes washer
• Clothes dryer

And here are some interior home systems that may be covered:

• Air conditioning
• Heating/heat pump
• Ductwork
• Interior plumbing
• Interior electrical
• Ceiling fans

A home warranty plan might also cover certain outdoor systems and lighting as well as smart-home devices. A plan may also provide an option to purchase coverage for a pool or spa.

How it works

The customer typically contacts the home warranty company and requests repairs, which are handled by a preferred and vetted service technician. The customer pays a requisite service fee or a copay for the pro to come out, as well as any fees not covered by the warranty subscription.

Booking home maintenance

Maintaining your home is important for its longevity, which is why a home warranty plan might also offer access to maintenance services, such as carpet cleaning, power-washing or even pest control. Service fees will still apply, but with this one-stop-service approach, the homeowner can conveniently access a network of vetted providers.

Protect your house with homeowners insurance.

House insurance is designed to safeguard the totality of your home, meaning from floor to ceiling, and covered personal property. This coverage helps with repairs or replacement if there’s damage to the property from a covered event, which may include:

• Fire
• Tornado
• Windstorm
• Hail
• Frozen plumbing
• Theft
• Vandalism
• Falling objects
• Explosion

Many insurance providers also allow clients to customize their coverage based on their specific needs. For example, a homeowner may want additional coverage for green upgrades that make their home more energy efficient, or extra coverage to protect valuable personal property, such as jewelry or musical instruments.

Many homeowners policies also offer endorsements that can protect your property against specific types of damage. For example, if you have trees, you can purchase an endorsement that covers damage from healthy fallen trees or branches, which will often include tree removal.

How it works

If you need to tap into your insurance benefits, gather evidence of the event and then contact your provider by phone, via mail or online to file a claim. Your provider will walk you through the necessary steps, which will include meeting with a claims adjustor to assess the damage.

Insurance discounts

Depending on your insurance provider, you may also qualify for discounted rates. For example, some providers offer a discount if you’re claim-free for a specified period of time, and some reward customers for home safety upgrades.

You’ll need to get a homeowners insurance quote to see exactly what discounts you qualify for.

AAA Discounts

For repairs, products and services not covered by a home warranty or homeowners insurance, AAA Membership can mean significant savings. For example, you can get discounts or earn AAA Dollars on security systems, solar-power systems or specific home products, such as air conditioner filters.

And what if you want to handle some home renovations yourself? AAA rewards DIYers with AAA Dollars and discounts at thousands of retail partners.

Home warranties and homeowners insurance help protect your home, inside and out. Talk with an insurance professional to learn what coverage is most beneficial based on where you live and what you have.

*AAA Home Warranty products are currently only available in select areas within North Carolina. These products are expected to expand into Atlanta and Chicago in 2023.