Home Warranty Vs. Home Insurance

Q: What’s the Difference in a Home Warranty and Homeowner’s Insurance?

A:
A home warranty and homeowner’s insurance can sometimes be confused but they are completely different coverages. A home warranty typically covers the home’s major systems and appliances while the homeowner’s insurance will cover theft or hazard damage: flood/fire/acts of God, etc.

What would homeowner’s insurance cover?

• Personal property, furniture, clothing, jewelry etc.
• Structure and contents of the home
• Your living expenses if the home is not in a living condition due to natural disasters
• Appliances, but only in the event of natural hazard or special circumstances.
• If someone visiting your house gets injured while on your property.
• It protects you from a variety of events, including fire, lightning, tree-fall, burglary, storms.

What Does the home warranty cover?

• Repair and replacement of home systems and appliances, due to normal wear & tear.

A homeowner’s insurance policy generally has a much higher deductible vs a home warranty service fee. Think $1,000 vs $60.00.

Example: Your plumbing leaks for a week while you’re on vacation. Your home warranty will cover the repair of the plumbing leak and your homeowner’s insurance would cover the secondary water damage to your property resulting from the leak.

Example:Your home is struck by lightning. This would be an act of God. Your home warranty typically does not cover electrical failures due to lightning strikes or electrical surge. This is a claim you would file specifically with your homeowner’s insurance policy.

And finally, if your mortgage company requires your home to be insured, they are referring to homeowner’s insurance, not home warranty coverage.