Home Warranty vs. Homeowner’s Insurance

September 29, 2021

When buying a home, whether it’s your 1st home, a move up or downsize home, or a vacation home, it’s important to do know the difference between a home warranty and homeowner’s insurance.  One thing you’ll want to understand is how to best protect yourself and your investment if anything were to go wrong.

Homeowner’s Insurance

Homeowners insurance pays for any accidental damages and loss that are caused by fire, lightning strikes, windstorms, and hail. It also covers the replacement of personal property in case of theft or damage and liability if a person were to get injured in your home or on your property. If you are getting a loan in order to buy your home, your lender will require proof of homeowner’s insurance prior to closing.  If you are paying cash, you should still have a homeowner’s insurance policy to protect yourself in case of a loss. Make sure to keep in mind that each type of coverage in the policy is subject to a limit and, in most cases, you will have to pay a deductible.

Home Warranty

A home warranty is designed to cover the cost of repairs and replacements of larger appliances and crucial systems in your home that may fail or break due to age and wear and tear. This includes but isn’t limited to HVAC, electrical, or plumbing components, kitchen appliances, garage door openers, etc. With a home warranty, you are required to pay premiums year-round, even if you do not use it, and it won’t cover damages if appliances were not maintained properly or if the damage is from a fire or other disaster.  Typically, there is a service fee when you need to have a contractor make a service call.