The Financial Conduct Authority (FCA) said between 2005 and 2011 the company had a profit-driven culture where targets were met by taking advantage of existing customers.
In addition to the record fine, Homeserve has paid £12.9m to affected customers in redress and is expected to pay £16.8m in total.
FCA director Tracey McDermott said: "Homeserve is another example of a firm that has acted without proper regard for its customers over a long period.
Chief executive Richard Harpin said: "We sincerely regret that customers have been affected by these issues.
"We have worked very hard over the last two years to put customers back at the heart of our business."