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How Home Insurance and Warranties Differ

When it comes to taking care of your house, you may be familiar with the concepts of homeowners insurance and home warranties. But do you understand the primary differences between these two
types of coverage?

If you’re not sure whether you should have homeowners insurance, a home warranty, or both, keep reading to learn more about each – including how they differ and what they do (and don’t) cover.

What is a home warranty?

A home warranty is a service contract covering normal wear or the breakdown of your home’s internal systems, such as electric, plumbing and HVAC, as well as appliances like the fridge, dishwasher and oven. They may come with a new home, but you could also purchase one after moving into an existing one.

Every home warranty can have slightly different terms, so make sure you understand what is covered and what isn’t, any limits on coverage, and whether a deductible or trade call fees apply.

What is home insurance?

A homeowners insurance policy covers certain damages to and loss of your dwelling, personal belongings and any other structures on your property due to a covered peril. Your policy may also pay for the medical bills of people who are injured on your property, or help cover the cost of temporary relocation while your home is being repaired or rebuilt.

Home Warrantv vs. Insurance

So what are the main differences between them?

  • A home warranty is optional, whereas homeowners insurance is usually required if you have a mortgage.
  • Insurance is for covered perils, such as fires and other unexpected events, while a warranty is for normal wear and tear.
  • A home warranty covers the interior of your home, whereas home insurance covers internal and external damage.

Whether you need both types of protection will depend on your situation, such as your emergency savings and your home’s age.

Always read your policy or warranty carefully to make sure you understand what is and isn’t covered.

Reach out if you have questions about your home insurance coverage.