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

A home warranty can cover service, repairs or replacement of your home’s major appliances and mechanical systems. Home insurance covers your house itself and your belongings in the event of sudden and accidental damage or even deliberate acts like theft. It can help pay for damage caused by fires, leaks and other common perils named in your policy.

Any home you buy, old or new, will need repairs at some point. For this reason, you can buy home warranties and home insurance. But they can help in very different ways. 

A home warranty is like the extended warranties available when you buy something new. It’s a service contract where you agree to pay a certain amount per year, and if your product develops a covered problem, your warranty company will cover repairs or may provide you a replacement at a reduced or sometimes no cost to you. A home warranty typically covers your heating and cooling, electrical, and plumbing systems.   It may also cover major appliances like the refrigerator and washing machine. A warranty is there for things that break down or stop working; situations that home insurance is not designed to cover. 

Home Insurance covers your home itself, the walls, floors, windows, roof, garage, and your belongings if a storm, fire or other calamity causes damage or if something is stolen. If a toilet leaks while you’re away and ruins the floors and furniture, your home insurance can help with the cost of fixing or replacing them. A home warranty typically wouldn’t help in this scenario. 

Your home insurance can also do a lot more. Say a tree in your yard falls on a neighbor’s house and wrecks the roof. Or a guest slips on your icy steps and breaks a leg. In both cases the liability part of your home insurance can help pay the costs for repairs to the roof or for medical treatment. It can also help you pay for legal costs if you’re sued for damage or injuries you are found responsible for. A home warranty does not cover costs for injuries or damage to someone else or their property. 

Both kinds of protection come with limits, often defined by choices you make about coverage. A home warranty, for example, might not cover an appliance that breaks down but is still under factory warranty. Your warranty company may also have requirements about which repair companies you can use. And it might not cover the cost of a major appliance upgrade if you’re replacing an old one that fails. 

Meanwhile, your home insurance policy will kick in only for damage covered by your policy caused by certain events like wind, hail and other “named perils” in insurance lingo. Not every kind of catastrophe is covered. For example, flooding generally requires special flood insurance.  

Both kinds of protection come with built-in limits on the number of repairs or costs covered. The limits are based, in part, on how much you want to pay for the coverage. 

When you are buying a house with a loan, the lender almost always requires insurance to protect the asset securing your loan.    A home warranty is up to you, but we highly recommend them in every instance.  Although we tend to shy away from recommending insurance companies to our clients (9 times out of 10 your best bet is to buy insurance from whomever you are already buying insurance from) we can make recommendations and provide you with information on multiple home warranty companies since they all offer coverage that is a little different. 

If you have any questions, please let us know, and be sure to ask how we can get you home warranty coverage for no money out of pocket as soon as you list your house with us so you don’t have to worry about things breaking during the selling process.  Just call 480 385 9107 or email us at vince@agentswithoptions.com.  We also have a YouTube channel with more information on this and many other tops, so please check it out at youtube.com/@thehelpinghandsteam

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