How Home Warranties Differ from Homeowner’s Insurance

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How Home Warranties Differ from Homeowner’s Insurance


February 8, 2018


Are you thinking about getting a home warranty? In celebration of National Home Warranty Day, we’re going to be going over how home warranties differ from homeowners’ insurance to help lead you in the right direction.

What you need to know about homeowners’ insurance:

Homeowners’ insurance is what will cover you in the event of accidental damage that occurs to your home and personal belongings resulting from fires, storms, theft, and even possibly natural disasters.

The four main areas covered under homeowners insurance:

  • Loss or damage
  • Personal property in case of theft
  • The interior and exterior of your home
  • General liability that may surface when a person is injured while on your property

In general, it is mandatory to have homeowners’ insurance, and it is usually required by a bank prior to obtaining a mortgage on your home. The average annual cost can range from $300 to $1,000, and all policies provide a deductible.

What you need to know about home warranties:

A home warranty is a service contract that will cover you in situations where your appliances or system components stop working properly because of wear and tear or age.

Components covered by a home warranty include:

  • Plumbing
  • Electrical
  • HVAC
  • Kitchen appliances
  • Washer and dryer
  • Pool and spa

Unlike homeowners’ insurance, home warranties are not required to obtain a mortgage for your home. Contract terms for home warranties typically last 12 months and are usually around $75 per month for coverage on systems and appliances. Although having homeowners insurance isn’t required, it is one of the smartest purchases you can make for your home because it will save you a lot of money in the long run.

If you have appliances that are high-value (or a plumbing system prone to breaking down), warranties are a way of regulating your budget to account for life’s big disasters.

And who doesn’t want a more predictable budget?