Home Warranty Vs. Home Insurance: A Detailed Guide

Home warranties and home insurance are two types of coverage that homeowners can purchase to protect their homes and belongings. Homeowners must learn the difference as these two make up many home maintenance costs. In this article, let’s explore home warranty vs. home insurance in detail to understand the subject matter better. 

What is a home warranty?

Home warranties cover the repair or replacement of major appliances and systems in your home, such as HVAC systems, water heaters, furnaces, dishwashers, washers, dryers, stoves, refrigerators, garage doors, and water pipes. 

The cost of a home warranty varies depending on the size of your home, the company you purchase it from, and the coverage you choose. Home warranties typically also have a deductible, which you must pay out of pocket when the service technician visits your home to take care of your complaint. 

Home warranties typically have a deductible, which you must pay out of pocket before the warranty company covers the repair cost. The cost of a home warranty varies depending on the size of your home and the coverage you choose.

What is home insurance?

Home insurance, also known as property insurance, is a type of insurance that covers the structure and contents of a private residence. It can protect you financially in the event of a covered loss, such as a fire, flood, or theft.

Home insurance policies typically cover the following:

• The cost to repair or rebuild your home’s structure if it is damaged or destroyed
• The cost to replace your personal belongings if they are lost or damaged
• Liability coverage in case someone is injured on your property
• Additional coverage for things like water damage, earthquakes, or theft

Home insurance covers the structure of your home, as well as the belongings inside your home. Some home insurance policies may also cover additional expenses, such as personal liability, medical payments to others, and loss of use. 

Homeowners’ insurance also typically includes coverage for personal property, such as furniture, electronics, and jewelry. The cost of homeowners insurance varies depending on the value of your home, the location of your home, and the coverage you choose.

Difference Between Home Warranty & Home Insurance

Home warranty and home insurance are two very different types of coverage. A home warranty protects you from the financial burden of repairing or replacing appliances and systems that break down due to normal wear and tear. 

On the other hand, home insurance protects you from financial loss from unexpected events, such as fire, wind, or theft.

Here is a table of the key differences between home warranty and home insurance:

Characteristics Of A Home Warranty

Here are the characteristics of a home warranty:

Coverage: Home warranties typically cover major appliances and systems in your home, such as HVAC systems, water heaters, furnaces, dishwashers, washers, dryers, stoves, refrigerators, garage doors, and water pipes. Some home warranties may also cover other items like roofs, electrical systems, and plumbing.

Deductible: Home warranties typically have a deductible, which is the amount of money you must pay out of pocket before the warranty company covers the cost of repairs. The deductible amount varies depending on the company and the type of coverage you choose.

Term: Home warranties are typically purchased for one year, but some companies offer two- or three-year terms.

Cost: A home warranty varies depending on the size of your home, the coverage you choose, and the company you purchase it from.

Exclusions: Home warranties typically have exclusions, meaning certain repairs may not be covered. Standard exclusions include:

• Normal wear and tear
• Pre-existing conditions
• Damage caused by negligence or misuse
• Damage caused by flooding or earthquakes

Claims process: Depending on the company, you will need to file a claim after a covered appliance breaks down. The warranty company will send a technician to your home to assess the damage. If the technician determines the item is covered by your warranty, the warranty company will pay for the repair or replacement.

Characteristics Of Home Insurance

Here are some of the characteristics of home insurance:

Coverage: Home insurance typically covers the structure of your home and the belongings inside your home. Some home insurance policies may also cover additional expenses, such as personal liability, medical payments to others, and loss of use.

Deductible: Home insurance policies typically have a deductible, which you must pay out of pocket before the insurance company covers the cost of repairs or replacements. The deductible amount varies depending on the policy and the company you purchase it from.

Term: Home insurance policies are typically purchased for one year, but some companies offer longer terms, such as three or five years.

Cost: The cost of home insurance varies depending on the value of your home, the location of your home, the coverage you choose, and your insurance history.

Exclusions: Home insurance policies typically have exclusions, meaning certain perils or losses may not be covered. Common exclusions include:

• Flood
• Earthquake
• War
• Intentional acts

Claims process: If your loss is covered, the insurance company will pay for repairs or replacements. If the adjuster determines your loss is covered, the insurance company will pay for the repairs or replacements.

It is essential to read the terms of your home insurance policy carefully before purchasing it to know what is and is not covered. You should also compare different home insurance companies to find the one that best meets your needs and budget.

Benefits Of Getting A Home Warranty

Here are some benefits of having a home warranty:

• Peace of mind: Knowing that you have coverage for major repairs can give you peace of mind and allow you to focus on other things.
• Cost savings: In some cases, the cost of a home warranty can be less than the cost of unexpected repairs.
• Convenience: Home warranty companies typically have a network of approved contractors who can make repairs quickly and easily.
• Coverage for major appliances and systems: Home warranties typically cover major appliances and systems in your home, such as HVAC systems, water heaters, furnaces, dishwashers, washers, dryers, stoves, refrigerators, garage doors, and water pipes.
• No deductible: Some home warranties have no deductible, meaning you don’t have to pay anything out of pocket for covered repairs.
• Easy claims process: The claims process for home warranties is typically much easier than the claims process for homeowners insurance.

Conclusion

Both home warranties and homeowners insurance can be valuable tools for protecting your home and its contents. The best way to decide which type of insurance is right for you is to talk to a qualified insurance agent. They can help you assess your needs and recommend the best coverage.