Home Warranty Versus Home Insurance

If you own a home or plan on buying one, you may wonder about the best ways to protect your investment. The two main ways to safeguard your home are a home warranty and a homeowners insurance policy. While they both provide financial protection, they have many differences worth noting.

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

A home warranty is a contract that may help cover repairs and replacement costs for household appliances and home systems in exchange for a monthly or annual payment.

A home warranty typically offers three types of plans: appliance plans, system plans or a combination. When an appliance breaks, you can contact your home warranty provider, and the company will send a technician to evaluate the issue. The technician will complete the work if they determine that it is covered. If it is not covered, you will have to pay the cost of the repair and the cost of the technician’s original visit. A home warranty is optional; many homeowners prefer to set aside money for home repairs and maintenance instead.

Homeowners insurance is a type of property insurance that typically includes dwelling coverage, liability protection, personal belongings coverage and additional living expenses. It helps protect against a wide range of perils, such as fire, smoke damage, vandalism, theft, falling objects, windstorms and hail. Lenders typically require homeowners insurance because they want to protect their investment.

When Should I Consider Getting Home Insurance Versus a Home Warranty?

The average homeowner should have a homeowners insurance policy because of its wide range of coverage and the fact that their mortgage lender requires it. A home warranty, on the other hand, is optional. Home warranties may benefit you if the following statements are true:

• You can’t or don’t want to do home repairs on your own.
• You have expensive appliances and systems.
• You don’t care about the make and model of your appliances.
• You don’t prefer repair service providers.
• You have older appliances.
• You have enough cash on hand to cover a deductible.

Most homeowners will have homeowners insurance, but only some will opt for a home warranty. It would be extremely rare for a homeowner to have only a home warranty.

If you need a homeowners insurance policy or want to evaluate whether your coverage is adequate, we’re here to help. Contact Cloverleaf Insurance today to discuss your homeowners insurance needs.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.