What is the difference between homeowners insurance and home warranty?

A home warranty covers the service, repair, or replacement of your home's main systems and appliances for a typical one-year period. This type of guarantee is issued by a home warranty company and is different from home insurance, which provides financial protection in the event of a disaster or accident. Home warranties help cover costs when an important home appliance or system breaks down. Home insurance, on the other hand, covers your home and personal belongings against theft and other hazards, and also provides personal liability coverage.

If you have a mortgage, your lender may require a home insurance policy. Of course, even if it's not mandatory, it makes financial sense to protect your investment with a good insurance policy. Home guarantees and home insurance share a similar structure, but offer different benefits. In both cases, you'll pay a fee to your provider in exchange for protecting your home and the things in it.

Your home warranty covers you primarily for normal wear and tear on certain appliances and major systems. On the other hand, home insurance covers damage to the house and its contents due to covered hazards. Homeowners insurance covers the structure of the home and the owner's personal property in the event that it is damaged or stolen in an emergency, such as a fire or robbery. While people sometimes confuse home guarantees with homeowners insurance, the reality is that the two have very little in common.

This information is not an insurance policy, does not refer to any specific insurance policy and does not modify any provision, limitation or exclusion expressly set forth in any insurance policy. Home insurance will increase in the event of serious damage, but not in the case of minor inconveniences, such as a broken water heater. If your insurance company doesn't cover your dog, look for specific liability insurance for dogs or a supplemental policy. While there is some variety in home insurance coverages, a typical home insurance policy covers the structure of the home and the personal belongings it contains, which can include many of the elements covered by a home warranty, in the event of a catastrophic event.

Homeowners insurance also covers your personal liability for injuries sustained by other people (those who don't live with you) and their property while they're on your property. To get the highest degree of home protection, it's a good idea to sign up for both a home warranty and homeowners insurance. While your insurance will cover damage and loss, a warranty covers most of the cost of repairing or replacing household systems and appliances that fail as a result of aging or wear and tear. Standard home insurance policies do not cover damage or loss caused by floods (whether natural or human-related) and earthquakes.

If you don't have a home warranty, the insurance will still cover the damage, but you'll need to buy the new water heater, the plumber and the removal of the broken water heater. Homeowners will generally have to pay a deductible, a fixed amount of money that comes out of the homeowner's wallet before the insurance company pays the money to pay the claim. Homeowner insurance policies will protect homeowners from external or internal damage and liabilities, and the best home warranty companies can help reduce the costs of system failures by covering professional repairs and covering the cost of repairs when Systems give way. In other words, the warranty will cover the failed appliance and the homeowner's insurance will cover the damage caused by the fault.

Other home insurance policies cover a greater number of tragedies than they list and will cover damage to everything except the “hazards” that they specifically exclude. When your home is paid off, the requirement is eliminated because the mortgage no longer exists, but most homeowners maintain their coverage knowing that paying your mortgage doesn't exempt you from home-related hazards (anyone can suffer a catastrophe at any time). .

Lynette Roen
Lynette Roen

Avid travel nerd. Award-winning tv practitioner. Hardcore music evangelist. Hipster-friendly web nerd. Incurable music advocate. General tv practitioner.

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