What Is the Difference Between a Homeowners Insurance Policy and a Home Warranty?

Owning a home requires ongoing and sometimes costly repairs, from repairing a broken oven, washing machine to replacing a leaky roof. Depending on what needs to be repaired or replaced and why, Homeowners Insurance will help in one area while a Home Warranty can help in other areas. They can both provide you with the proper protection.

Homeowner’s Insurance covers four primary areas under your policy in the event of loss due to a disaster such as fire, theft, wind storm, lightning, falling of a tree, vandalism and many other damages. It covers:

  • The Interior and Exterior structure of your home
  • Your personal belongings
  • It also protects against a claim or lawsuit that result in bodily injury or property damage to others caused by an accident on your property or by your personal activities anywhere.

A home warranty is a form of coverage that you can use to supplement your homeowner’s insurance policy and will protect you from the cost of repairs that policy doesn’t cover; it can pick up where your homeowner’s insurance leaves off. There may even be a possible overlap in coverage between the two. Check with your insurance agent and home warranty representative regarding the details of each of the coverages.

  • It is an annual service contract which lasts one year, not a policy. It usually does not carry a deductible, but a service charge, every time a service professional comes to your home. The average cost is usually $300.00 – $900.00 per year.
  • A homeowner can add optional coverages such as coverage for a swimming pool and spa equipment, septic tank, etc.
  • The cost of the service call will run between $40.00-$100.00 per visit and per item.

Typically, it covers things such as: air conditioning, heating, plumbing, major appliances, and items that a standard home insurance policy would not cover.

For example, if your washing machine leaks and water damages the floor, your homeowner’s insurance policy may cover the damage to the floor, but not repair or replace the washing machine. Your home warranty, would cover the repair or replacement of it.

Another example is if your water heater exploded and caused damage to the walls of your home, your homeowner’s insurance would cover the cost of fixing the wall, while the home warranty would replace or repair the water heater.

Remember that home warranties are not substitutes for a homeowner’s insurance policy and that each company will not offer you the identical coverage. Specific disasters and/or exclusions will vary on each individual policy.

If you have any questions about your policy, contact your insurance agent or home warranty representative.

This article does not include all available information regarding Homeowner’s Insurance or Home Warranties, it is for informational purposes only.