What we verified in “Home warranty or homeowners insurance: the differences”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. According to an FTC alert of February 24, 2023, so-called home warranties are really service contracts that help pay for things that break and typically cover replacements and repairs for things like appliances or air conditioning systems; unlike builder or product warranties, they cost extra and last for a set amount of time; and the FTC says a home warranty is only as good as the company responsible for coverage.

   Sources 1 · So what's the deal with "home warranties"? (February 24, 2023): '"home warranties" (which are really service contracts)'; 'typically cover replacements and repairs for things like appliances or air conditioning systems'; 'cost extra'; 'last for a set amount of time'; 'A home warranty is only as good as the company responsible for coverage.' · Checked October 31, 2026

2. The same FTC alert suggests asking yourself, before you buy, whether it is likely to save you money; whether there are deductibles or fees each time something is serviced; whether there are limits on how much you can be reimbursed; whether accidental damage is covered; whether certain appliances or systems are not included; and whether there are restrictions or fees for cancellation; it warns that waiting a long time to get paid back reduces the value of coverage; suggests searching the company's name with words like 'review' or 'complaint' to see whether people have had problems; says calls about service contracts might be telemarketers looking for your money or personal information; and asks people to report bad experiences at ReportFraud.ftc.gov.

   Sources 1 · So what's the deal with "home warranties"?: 'Is it likely to save you money?'; 'deductibles or fees you need to pay each time products are serviced'; 'Are there limits on the amounts you can be reimbursed?'; 'Is accidental damage covered?'; 'Are certain appliances or systems not included?'; 'Are there restrictions or fees for cancellation?'; 'Waiting a long time to get paid back can reduce the value of having coverage'; '"review" or "complaint"'; 'might be telemarketers looking for your money or personal information'; 'tell the FTC: ReportFraud.ftc.gov' · Checked October 31, 2026

3. According to the CFPB, homeowners insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary; when you have a mortgage, the lender generally requires proof of insurance; standard homeowners insurance does not cover damage from earthquakes or floods, though it may be possible to add that coverage; many people pay it through an escrow account in their monthly payment; and if you do not have insurance, the lender may buy it for you and charge you, with advance notice, and that insurance may cover only the lender and cost more.

   Sources 2 · What is homeowner's insurance? (last reviewed Aug 08, 2024): 'Homeowner's insurance pays for losses and damage to your property if something unexpected happens, like a fire or burglary'; 'lenders generally require proof that you have homeowner's insurance'; 'Standard homeowner's insurance doesn't cover damage from earthquakes or floods, but it may be possible to add this coverage'; 'through an escrow account'; 'your lender is allowed to buy it for you and charge you for it—but your lender must give you advance notice'; 'that insurance may only cover the lender, and not you. It also may be more expensive' · Checked October 31, 2026

4. According to the Texas Department of Insurance homeowners guide, most policies cover damage from fire and lightning, sudden and accidental release of water or smoke, explosion, theft, vandalism, aircraft and vehicles, and windstorm and hail (except on the Gulf Coast); and most do not cover flooding, a continuous water leak (or mold removal, except from a covered risk), termites, insects or rodents, wear and tear, earthquakes, or losses when the home is vacant for the number of days in the policy; and coverage varies by company.

   Sources 3 · Texas Department of Insurance, Homeowners insurance guide, 'What risks does a home policy cover?': 'Most policies cover damages from: Fire and lightning'; 'Sudden and accidental release of water or smoke'; 'Explosion'; 'Theft'; 'Vandalism'; 'Aircraft and vehicles'; 'Windstorm, hurricane, and hail (but not if you live on the Gulf Coast)'; 'Most policies don't cover damages from: Flooding'; 'A continuous water leak; policies also won't cover mold removal, except to repair damage caused by a covered risk'; 'Termites, insects, rats, or mice'; 'Wear and tear'; 'Earthquakes or earth movement'; 'Coverages vary by company' · Checked October 31, 2026

5. According to the same Texas guide, when you have a claim you must meet a deductible, the part of the claim you pay yourself; for example, with a $1,000 claim and a $300 deductible, the company pays $700; you may have different deductibles for each coverage; and the first page of the policy (the declarations page) summarizes your coverages, limits and deductibles.

   Sources 3 · Texas Department of Insurance, Homeowners insurance guide, 'Deductibles and dollar limits': 'If you have a claim, you must meet a deductible'; 'if you have a $1,000 claim and your policy has a $300 deductible, the insurance company will deduct $300 from your claim amount and pay you $700'; 'You might have different deductibles for each type of coverage'; 'The first page of your policy is the declarations page' · Checked October 31, 2026

6. According to the Texas Department of Licensing and Regulation (TDLR), the agency licenses companies that sell residential service contracts, also known as home warranties; these contracts cover the cost of repairing or replacing damage to large appliances and electrical, plumbing, heating or air conditioning systems caused by a power surge, a defect in materials or workmanship, or normal wear; they are not the same as builder warranties, which typically cover permanent parts of a new or remodeled home, and builder warranties and homeowners insurance are regulated by another agency, the Texas Department of Insurance; you are not required to buy one when you buy a home; you should check that the company is licensed; and TDLR has an ombudsman to help with claim delays or denials and takes complaints.

   Sources 4 · TDLR, What Should I Know About Residential Service Contracts? (CP FORM-211, Oct. 2022): 'licenses residential service companies that sell residential service contracts (RSCs), also known as home warranties'; 'cover the cost of replacing or repairing damage to large home appliances or residential electrical, plumbing, heating or air conditioning systems caused by a power surge, a defect in materials or workmanship, or damage caused by normal wear'; 'not the same as builder warranties'; 'TDLR does not cover builder warranties on new construction, or homeowners insurance, which are regulated by the Texas Department of Insurance'; 'you are not required to purchase a residential service contract when you purchase a new or existing home'; 'check to see if the RSC they are considering is licensed'; 'RSC Ombudsman'; 'claim delays or denials'; 'File A Complaint' · Checked October 31, 2026

7. The same TDLR sheet suggests asking how much the plan costs, how long it lasts, what it covers, whether there are limits or incidents it does not cover, whether there is a cap on what the company pays, whether a pre-existing condition voids coverage, whether there is a service call fee, who decides which company makes repairs, how fast repairs are made and whether the plan replaces an item that cannot be repaired.

   Sources 4 · TDLR, What Should I Know About Residential Service Contracts?: 'How much will the plan cost?'; 'How long does the plan last?'; 'What specific items does the residential service contract cover?'; 'Are there any limits to the coverage?'; 'Is there a limit to how much the company will pay?'; 'Would a pre-existing condition void coverage?'; 'Is there a fee for service calls?'; 'Who will decide what company will make any repairs?'; 'How fast will any repairs be made?'; 'Will the plan replace an item that can't be repaired?' · Checked October 31, 2026

8. According to the California Department of Insurance, a home warranty (called a home protection contract in California law) is a contract in which the company promises to repair or replace parts of a home system or certain appliances, and it covers wear and tear, deterioration or defects that existed when you bought or leased the home; it is not the same as a homeowners policy, which covers damage from major events such as wildfires, and does not replace it; it sometimes comes with a home purchase, paid by the seller or agent, and you can choose the company; all home warranties contain dozens of exclusions, which many people discover when a claim is denied; and in California these companies must be licensed by the Department of Insurance, which posts information and complaints on each one and helps if your appeal is denied.

   Sources 5 · California Department of Insurance, Home Protection Contracts: 'Home warranties also are called "home protection contracts" in the California laws'; 'promises to repair or replace parts of a home system or certain appliances'; 'Home warranties cover wear and tear, deterioration, or defects that existed when you bought or leased your home'; 'Home warranties are not the same as a homeowners' insurance policy'; 'Home warranties do not overlap or replace a homeowners' insurance policy'; 'often paid for by the seller or agent'; 'you can choose your warranty company'; 'All home warranties contain dozens of exclusions'; 'only discover the exclusions ... when they file a claim and have it denied'; 'home warranty companies are regulated and licensed by the California Department of Insurance'; 'If a home protection company denies your appeal, you may seek assistance from the Department' · Checked October 31, 2026

9. According to the California Department of Insurance, that state's law requires a home warranty to state clearly which appliances, systems and components it covers; all exclusions and limitations; how long it lasts, what it costs and how it renews; what services the company performs and on what terms; the service fees; any time or area limits on requesting service; that service will be performed on a phone request, without filing claim forms first; and that the company will start service within 48 hours of the request.

   Sources 5 · California Department of Insurance, Home Protection Contracts, 'Required Home Warranty Terms': 'Each of the appliances, systems and components covered by the contract'; 'All exclusions and limitations'; 'The period during which the contract will remain in effect, the protection contract fee, and the renewal terms'; 'The service fee or fees'; 'restrictions as to the time period when or geographical area'; 'services will be performed upon telephonic request to the company, without any requirement that claim forms or applications be filed'; 'services will be initiated by or under the direction of the company within 48 hours after a request' · Checked October 31, 2026