Is Home Insurance and Home Warranty The Same Thing?

A home insurance policy is property insurance that covers losses and damages to a residence, which can include furnishings and other assets. It can also provide liability coverage for accidents that happen in or around the house.

On the other hand, a home warranty is a residential service contract that covers the cost of maintaining household systems or appliances for a set period.

Do I Need Home Insurance?

Today, If you have a mortgage, then you probably have home insurance. Most mortgage companies require home insurance and will not proceed without proof of it. 

Suppose you experience a disaster that is covered under your home insurance, such as a hurricane or lightning or even a home fire. In that case, your home insurance will cover those damages. They will provide you with the funds to cover your losses and fix the damages. You may even receive enough to rebuild your home entirely. 

If your clothing, furniture, appliances, and/or other household items are destroyed in an insured disaster that affects your home, your home insurance will cover most of those items. You may have a limit that your insurance company will payout, though. Some will only cover a certain percentage, typically 50% to 70%, according to the Insurance Information Institute. 

Home insurance also provides liability coverage for damage that occurs in or on your property. This protects you from lawsuits that others could potentially file against you. For example, suppose your neighbor is bitten by your dog while visiting your home. In that case, your home insurance will cover her medical costs due to the liability coverage that is included in your home insurance. 

You will also receive reimbursement if you are forced to stay elsewhere, such as a hotel, while renovations are done on your home. This is referred to as “additional living expenses” and includes:

  • Hotel expenses
  • Rent (if you rent an apartment/home instead)
  • Restaurant meals
  • Other costs you incur while out of your home

Insurance companies do apply a limit to the reimbursement amount, so always check your policy first. 

Do I Need A Home Warranty?

A home warranty does not cover the same damages that home insurance covers. A home warranty is essentially a contract between you and a home warranty company that provides discounted repairs and replacement services on major components of your home, such as your HVAC or plumbing. It will also cover your furnace and electrical systems and may provide coverage for other components, such as your washer or dryer. 

These are the areas of your home that home insurance does not cover. If it did, it would be costly and more than likely still not meet the deductible. If you purchase a policy, there will most likely be a component that provides certain coverage. 

The warranty companies have specific companies that they have agreements/contracts with, meaning when something breaks down in your home, that specific company arrives to assess the damage. If they decide the damage is covered under the warranty, they will stay and fix the damage. 

In conclusion, the two are not the same, do not provide the same types of coverage, but they are both highly recommended when owning a home. If you still have questions regarding the differences between home insurance and home warranty, reach out to us today!