They sound so similar, but they protect different things.
So what’s the difference between a home warranty and homeowners’ insurance?
- Home warranties cover repairs to many of your home’s appliances and systems.
- Homeowners insurance protects a homeowner against damages to the house itself, or to possessions in the home; it also provides liability coverage against accidents in the home or on the property.
Let’s look more closely at each:
A home warranty covers costly home repairs and replacements due to normal wear and tear. It is not your homeowner’s insurance policy, but it is a separate contract that covers repairs and replacements on systems in your home, usually for a period of one year. A home warranty is often included by the seller when you purchase a home. It provides peace-of-mind to the homebuyer, by providing financial protection – for a set period of time – against breakdowns of critical home systems and appliances.
Home warranties cover many of your home’s crucial systems and appliances, but they must be in working order before the contract is entered into with the warranty company. Make sure you have reviewed your contract and coverage before you need it to understand what is covered and what is not. When you buy a home warranty, consider premium and optional coverage to customize the plan to fit your needs. Contract costs and coverage can vary widely, so be sure to do your research before accepting a warranty offer.
When a home warranty is understood and utilized for its intended purposes, it can be the easiest way to save on home repairs and reduce the extra stress that comes with a home.
Homeowners insurance is a form of property insurance designed to protect an individual’s home against damages to the house itself, or to possessions in the home. Homeowners insurance also provides liability coverage against accidents in the home or on the property.
While homeowners insurance covers most scenarios where loss could occur, some events are typically excluded from policies, namely: earthquakes, floods or other “acts of God” and acts of war. For people who live in certain parts of the country, adding an extra policy for earthquake insurance or flood insurance can be a good idea to offer further home protection and peace of mind.
Do you have additional questions about homeowners insurance? We’ll be happy to explain options for your situation. Contact us today – we’re happy to help.