What’s the Difference Between Home Insurance and a Home Warranty?

If you’re in the process of buying a new house or are simply thinking about getting more coverage for your property, you’ve probably heard about both home warranties and classic homeowners insurance. When it comes to home insurance vs. home warranty options, both offer important protection for your house. However, they provide completely different levels of coverage. 

So what kind of policies should you get? If “Do I need both home insurance and a home warranty?” has crossed your mind, explore this guide to get answers to that question and more about warranties and traditional insurance policies. 

Unpacking the Basics of Home Warranties vs. Home Insurance 

If you’re a first-time homebuyer trying to figure out the difference between home insurance vs. home warranty policies, it can help by breaking down each option. 

Quick Definitions to Help You Understand Each 

Home warranties are extra plans you can purchase to cover the appliances and systems in your residence if they break down due to normal wear and tear. They typically cover major systems like plumbing, electrical, and HVAC, along with large appliances like your oven and fridge. 

Meanwhile, home insurance covers your property when accidental damage occurs. It protects the structure of your dwelling, other structures on your property, and the belongings you keep in your house. 

Why It’s Easy to Confuse the Two 

The idea of a warranty is pretty similar to a classic insurance policy. If you need to repair something, you can rely on both insurers and warranty providers to help you cover the costs instead of paying out of pocket. Additionally, they both involve monthly premiums that you pay in exchange for protection from future expenses. However, they ultimately pay for damages related to different situations. 

Costs of Home Warranties vs. Insurance 

Insurers and warranty companies both charge monthly premiums for their services. If you make a claim with your insurer, you’ll probably have to pay a deductible to get the rest of the cost covered. If you choose a high-deductible plan, you can get a lower monthly premium, while low-deductible plans will have higher premiums. 

Warranty providers may also charge small service fees when they need to make a repair, but this amount is significantly less than standard maintenance and repair costs. 

Typically, homeowners policies will cost more than warranties, but it ultimately depends on your area, the specifics of your house, and how much coverage you choose for both your warranty and your insurance. 

What Does Homeowners Insurance Cover? 

Homeowners plans are designed to protect your investment if something unexpected harms your property. So what exactly does that entail? 

Damage From Fire, Theft, Weather, and More 

If your house, fence, or other structures on your property are damaged due to a covered event, your insurance will kick in. Covered perils include things like fires, tornadoes, hurricanes, floods, and even severe thunderstorms. They also include vandalism, theft, and similar incidents. 

Liability Coverage and Personal Belongings 

Your policy doesn’t just cover your house itself. It can also help reimburse you for damages done to the personal property inside your home. It also provides some liability protection if someone else gets injured and it is your fault, say a fall on your steps or if your dog bites someone at the dog park (some breeds are not covered). 

What’s Covered by a Home Warranty? 

Meanwhile, home warranties focus on covering certain systems and key appliances in your house when they break down due to regular use. Your insurance is there for unexpected emergencies, while your warranty is there for run-of-the-mill regular maintenance and repairs. 

Repairs or Replacements for Appliances and Systems 

If your plumbing gave out while under your homeowners warranty, you could file a claim for a repair or even a full replacement. Your warranty can cover appliances like ovens, dishwashers, clothes dryers, water heaters, and more. This is in addition to all of the electrical wiring, plumbing, and HVAC components in your house. 

Coverage for Everyday Wear and Tear (Not Disasters) 

The main thing to know is that warranties cover standard use, not emergencies and accidents. If your HVAC system was damaged in a fire, for example, your warranty wouldn’t apply. 

Do You Need Both? Or Just One? 

The most important thing to know about getting home insurance vs. home warranty protection is which kind of policy you need for your property. Ultimately, it comes down to your specific situation. 

When Each Type of Protection Comes in Handy 

If you’re taking out a loan to buy your property, a homeowners policy isn’t just nice to have; it’s a necessity. Most lenders require you to get insurance as a prerequisite for getting a loan. This is because they need to know that their investment is fully protected if an accident happens. On top of simple lending requirements, homeowners coverage is ideal for anyone who wants to protect their finances and have peace of mind. 

Meanwhile, warranties are most useful in specific situations. If you have a new building, the original manufacturer’s warranty will likely cover many of your systems. That means you don’t need to double-dip and get extra protection until the original warranty runs out. After that, however, warranties are extremely helpful, especially for old homes with old appliances that are due for repairs. 

Homeowners Who Might Benefit From Having Both 

You don’t have to pick one or the other when it comes to home insurance vs. home warranty options. If you have a house with appliances and systems that no longer have a manufacturer’s warranty, you can probably benefit from getting both standard coverage and a warranty plan for your house. 

Know the Difference — And Make the Right Coverage Choice With Freeway 

The difference between a home warranty vs. homeowners insurance may seem small, but it makes a big difference when it’s time to file a claim. Warranties are there to help out with issues related to regular use, while your standard insurance is designed to cover emergency accidents and other covered perils. While warranties may be more helpful for certain homeowners than others, you’ll always want to have insurance in place to reduce your liability and protect your house. 

At Freeway, you can find affordable, dependable homeowners policies that will safeguard your house and your finances. Your homeowners plan is your first line of defense against unexpected damages to your property, so you need a plan you can rely on. Get a quote online or over the phone at 800-777-5620 to start exploring your homeowners protection options. You are also welcome to stop in a convenient office location to talk to an agent face to face.