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The difference between home warranty and home insurance

Buying a home is one of the biggest and most important investments anyone can make in their lifetime. That’s why it’s crucial for every homeowner to make sure that their property is well-protected.

There are so many hazards that could put your home in jeopardy, from hurricanes to faulty appliances. Making sure you have the right kind of property protection is a must.

Getting a home warranty policy and/or a homeowner’s insurance policy are the most common ways to protect your property from unexpected damage. They may sound similar but a home warranty and a home insurance provide different kinds of protection.

What is the difference between a home warranty and a home insurance?

A home insurance policy covers incidents such as fires, storms, and theft. Contrary to popular belief, many home insurance policies don’t cover earthquakes, flooding or mold.

A full home insurance coverage includes dwelling protection, personal property protection, and liability protection. If you’re using a home mortgage loan, lenders require homeowners to get their homes insured. A home warranty, on the other hand, is a service contract that helps you repair or replace certain aspects of your home like systems and appliances. Also, unlike home insurance, a home warranty is completely optional and isn’t required by law or by the lender.

What is the full coverage of a home warranty policy?

A home warranty takes care of the repair and/or replacement of your home’s system components and appliances. These particular home features are protected from everyday wear and tear, as well as unforeseen appliance or system breakdowns. The policy typically covers the following:

  • HVAC system
  • Plumbing
  • Electrical wiring
  • Refrigerators
  • Washers
  • Dryers
  • Stoves
  • Dishwashers

You can also include other special amenities such as pools, spas, and jacuzzis. Typical home warranty policies usually last for 12 months, after which you have to renew your contract.

Wondering what the best home warranty is for you? Your choice will depend on your needs and budget. There is a range of home warranty policies from basic plans to those with extensive coverage, as well as a massive selection of great companies offering these home warranties.

How can one claim a home insurance policy and a home warranty policy?

A home warranty and a home insurance have fairly similar claiming processes.

For example, when you need to claim home insurance after a fire, an insurance adjuster will assess the damage of the home. Once the insurance claim has been filled out and approved, you have to pay an insurance deductible before the home insurance company payments come in.

When claiming a home warranty, a pre-screened technician will come to your home and evaluate the problem. If a major appliance is no longer working, for instance, the technician will determine if the reason for the breakdown is covered by your policy. If it is, then the technician will repair or replace that appliance after you pay the one-time initial service fee.

What are the advantages of getting a home warranty?

Much like home insurance policies, home warranties provide peace of mind and a financial safety net in case of emergencies. You won’t have to worry about sudden home system malfunctions or appliance breakdowns and how to pay for these.

Home warranty policies are especially beneficial for homeowners who haven’t factored in appliance repairs and replacement costs into their budget. The set cost of home warranties and monthly payments make it more manageable and cost-effective for homeowners to protect their homes from unforeseen damage.

Is it a good idea to get both a home warranty and home insurance?

Most homeowners usually have home insurance by default. So, the question now is this: should you still get a home warranty? Once again, it depends on your budget and needs.

Getting both a home insurance and a home warranty reinforces your home’s protection. From burglaries and other damages to major appliance replacement and system repairs, these two instruments will have all these covered.

However, there’s still the possibility of nothing needing repairs or replacement in the duration of your home warranty. Consider your finances and the state of your home before making any final decisions.

If you’re still on the fence, check out our article about important things to consider before buying a home warranty.

Get in touch with expert Pierce County and King County real estate agent Lori Lewandowski!

Need more advice on home warranties, home buying, or home selling? From local market expertise to relocation advice, I can help you in every step of your real estate transaction. Get in touch with me today by calling 253.617.5922. Or you can send a message to lorilewandowski(at)gmail(dotted)com.