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The Difference Between Home Warranty and Homeowner’s Insurance

The Difference Between Home Warranty and Homeowner’s Insurance

While both home warranty and home insurance are meant to protect homeowners from possible issues in and around their home, there are some major differences between the two. 

It just so happens, we have a little info to help you learn more – here’s what you need to know.

 Difference Between Home Warranty and Homeowner’s Insurance Parachute ImageWhat is Home Owner’s Insurance? 

In short, homeowner’s insurance is a type of property insurance meant to protect you from damages or overall losses in and around your home (as well as the home itself). For example, flood, fire, weather-related damages, and theft may all be covered by insurance. 

What’s more, this type of insurance may also provide you with liability coverage – protecting you in the event of an accident in your home or on your property – someone falling and hurting themselves on your front stairs or sidewalk, for instance. 

Like car insurance, home insurance is mandatory but you’ll have some choice when it comes to what type of coverage you prefer. Some owners opt for basic coverage, while others prefer broad coverage. Your insurance broker will be able to help you determine which is best for you.

Details of Coverage

  • No-Frills – This type of coverage is best for homeowners on a tight budget and typically applies to older homes that are more likely to have problems. While this will provide the owner with some protection, there are exclusions. For example, the insurance company may pay for repairs on your home, but you won’t receive a per diem for food or lodging. 
  • Named Perils or Basic – Basic coverage applies to specific damages only as outlined in your policy. For example, you may be covered for flood and fire, but not covered in the event of theft or hail damage. 
  • Comprehensive – While comprehensive insurance may cost a little more than other options, it guarantees your home, and everything in it, will be covered (unless there are some items specifically excluded). 
  • Broad – If basic insurance doesn’t provide the coverage you’re looking for but comprehensive costs more than you’re willing to spend, broad coverage provides a mid-range option. In addition to providing coverage for the home itself, it will also cover certain items within. 

Difference Between Home Warranty and Homeowner’s Insurance Hands ImageWhat is Home Warranty? 

While homeowner’s insurance covers potential accidents or damages to the home or property, home warranty covers specific elements of the home itself. Warranty is mandatory for all new builds in Alberta and protects new buyers from builder-related defects. 

Details of Coverage 

  • Year One – Materials and Labour Defects: For the first year, the builder is required to repair any defects relating to materials used. This includes items like flooring, trim, and fixtures, for example. 
  • Year Two – Mechanical/Distribution Systems: Two years coverage for systems related to heating, electrical, and plumbing.
  • Year Five – Building Envelope: Considered the “shell” of the home, the envelope refers to the exterior and includes roofing, framing, and cladding.
  • Year Ten – Structure: This refers to your home’s structural elements and any material or labour related defects resulting in the failure of load-bearing parts. Owners will enjoy this coverage for a full ten years after their possession date.

What Are the Major Differences?


  • Problems are directed to the insurance company.
  • Required on new and old homes. 
  • Can be paid monthly, annually or otherwise depending on the insurer and your preferences.
  • Does not expire (but may need to be renewed). 


  • Problems are directed to the builder.
  • Warranty comes with every new home – no additional payments required.
  • Coverages expire over the course of time.  
  • The builder is not liable for home-related accidents, fire, flood etc. (unless they were a result of material or labour defect).

As we mentioned, both home insurance and home warranty will afford you some well-deserved peace of mind. 

Be sure to go through your insurance and warranty documents thoroughly so you’re familiar with your policies and know what to expect in the unlikely event of a problem. 

Photo credits: protected house, parachute

About The Author

Sereena S.

Mom of two, wife to one, and a dog lover, although cats can be okay too. Sometimes.

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