What is the Difference Between Home Warranty and Home Insurance?

home insurance vs. home warranty
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Homeowners insurance and a home warranty work in different ways, but both provide protection for your home. Homeowners insurance can help protect against disasters such as flooding and fire. A home warranty covers the cost to repair or replace your home’s major systems, like plumbing and heating/cooling. When deciding which of these two types of coverage is best for you, consider how long you plan on owning this home. Homeowners insurance offers more benefits if you intend on staying in your home for a long time, while home warranties offer lower monthly payments if not.

What is a Home Warranty?

A home warranty offers protection for your home against mechanical failures in the major systems, including electrical wiring, plumbing, and heating/cooling system. A home warranty is typically sold as an extra benefit when you buy a new home or refinance your mortgage through specific lenders.

Think of it like car insurance: You pay monthly to protect yourself and your family from unexpected costs if something goes wrong with something big – like brakes failing while driving on the highway and not being able to stop. The same concept applies here – you can avoid large expenses by having your home’s most important systems covered. This way you don’t have to worry about what will happen if your refrigerator stops working! Just like car insurance companies offer multiple levels of coverage for different needs, home warranty companies offer multiple levels of home warranties depending on the price range of your home.

Make sure to read the contract carefully and make sure you understand when it will start covering certain things or when something like annual inspections are due! A home warranty does not cover preexisting conditions. Each system has a timeline after which it must be replaced by another new one (for example: if your boiler was installed before 2004, then that is considered ‘outdated’ and therefore cannot be covered under a home warranty plan.

What Do Home Warranties Cover?

Home warranties cover home systems that are most likely to break down, including major appliances like your furnace or water heater. The cost of servicing these items can be very expensive so it’s best to have home warranty coverage in place before they go wrong!

What Is Homeowners Insurance?

Home insurance helps protect against disasters such as flooding, fire, vandalism/theft, etc. Another important detail about homeowners insurance is that it does not cover preexisting conditions. This means that if your home already has a current issue with the furnace or roof, it can’t be covered under this plan and you will have to fix it yourself before purchasing homeowners insurance.

You also don’t get any discount on homeowners insurance because of having home warranty – they are two separate policies. If you are looking for home warranty, keep in mind that these plans do not cover personal property like furniture or clothes. Homeowners insurance coverage can help protect against theft and water damage to your belongings as well.

What Do Home Insurance Policies Cover?

A homeowners insurance policy typically covers damage due to fire, flooding and theft as well as personal property loss. In home insurance, your home is covered as well as any personal belongings you have inside the home – this includes furniture, clothes, and electronics.

What Do They Cost?

A home warranty typically costs $50 to $100 per month and covers the most common home systems. A home insurance policy can cost anywhere from $250-750 a year depending on where you live, what your house is worth and other factors that affect risk. These plans also vary in terms of how much they will pay for repairs or replacements.

Do You Need Both?

Home warranties protect against mechanical failures only while homeowners insurance protects against damage due to weather as well as home-related accidents. If you have a home warranty, your home is not automatically covered under homeowners insurance and vice versa! Home warranties are helpful in the event you want to insulate the risk of unforeseen expenses as a result of your home’s systems failing. This is a great stopgap to avoid costly, unforeseen expenses for major repairs.

If you have any questions regarding home warranties or homeowners insurance, reach out to our team of experts. The Malhotra & Assoc. Insurance team is devoted to sharing their expertise with you so you can make empowered decisions for your future!

Disclaimer: This blog post is meant for general informational purposes only and may not reflect your specific policy.

About the Author: Alekha is an expert in the insurance space and has been with the Malhotra & Assoc. Insurance team since its inception. Alekha works to provide expertly written and researched content for the Maholtra & Assoc. Insurance agency.

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