If you own a home or are thinking of buying one, you either have homeowner’s insurance or plan on getting it—but you may have also heard about home warranties. These are often confused with each other, yet they offer different types of coverage.
Knowing the differences between home warranties and homeowner’s insurance is important. Here you can discover what makes each one unique and how they can protect you from all kinds of issues happening at your home.
What is a Home Warranty?
A home warranty is a service contract that can give you coverage for everyday wear and tear on home appliances and systems. If something breaks down, a home warranty can help you pay for a repair or replacement on a covered item.
You can buy a home warranty directly from a company like America’s Preferred Home Warranty (APHW), or you might receive a home warranty as part of a home purchase. The cost of a home warranty, and whether you pay for the service contract annually or monthly, depends on the provider.
What Does a Home Warranty Cover?
Most home warranty companies offer customers a few coverage options. These might include a basic or standard home warranty, plus additional options which can:
- Provide enhanced coverage
- Require lower fees, premiums, or out-of-pocket costs
- Include add-ons that extend your coverage
The home appliances and systems covered by a home warranty depend on the provider and plan you choose. However, most plans offered by home warranty companies include coverage toward repair or replacement of:
- Common household appliances like a dishwasher, fridge, and oven
- Major home systems like plumbing, electrical, and heating
It’s important to read the service contract to fully understand a plan’s limitations before you sign. But you should also know that some providers will let you buy optional coverage for items not covered by one of their home warranty plans.
Some home warranty companies provide coverage for items in single-family homes, while other companies, like APHW for example, offer coverage for additional property types, such as condos, townhomes, multi-family units, and new construction.
Do You Need a Home Warranty?
Whether you buy a home warranty or not is up to you. However, you may want to get a home warranty if you worry about being able to afford the repair or replacement costs if something breaks down unexpectedly.
Here are some examples from HomeAdvisor of what repair costs could look like without a home warranty:
- Up to $450 for a fridge/freezer
- Up to $300 for a dishwasher
- Up to $430 for an oven or range
- Up to $938 for a water heater
- Up to $1,478 for a roof repair
If you’re on a tight budget or simply want peace of mind, a home warranty can provide you with the protection you need if something covered fails.
What is Homeowner’s Insurance?
Homeowner’s insurance is a specific kind of property insurance that helps financially protect your home, assets, and personal belongings in the event of a disaster or accident. According to the Insurance Information Institute, some of these disasters and accidents include:
- Fire and explosions
- Hurricanes and windstorms
- Hail and lightning
- Vehicle and aircraft damage
- Theft and vandalism
What Does Homeowner’s Insurance Cover?
A typical homeowner’s insurance policy provides four types of coverage for homeowners. These include:
- Coverage for the home itself, including detached structures like a garage, deck, or tool shed
- Coverage for personal belongings, like furniture, clothing, and sports equipment
- Liability protection to help pay for injuries or property damage that happen to other people
- Additional living expenses like hotels, meals, and other costs when you’re unable to live in your home due to damage or disaster
While most standard homeowner’s insurance policies cover natural disasters like those listed above, they don’t often cover flooding or earthquakes—but you may be able to buy additional coverage for these potential situations.
If You Have Homeowner’s Insurance, Do You Need a Home Warranty?
If you have a home, you most likely have homeowner’s insurance, since most mortgages require it as part of the lender agreement. Yet, while homeowner’s insurance protects your home from all kinds of events and disasters, it doesn’t cover your home for normal wear and tear.
This is where a home warranty can help.
Here’s an example of how homeowner’s insurance and home warranties work together to give you more protection:
If your dishwasher starts to leak and causes floor damage, homeowner’s insurance could cover the damage, but may not fix the leak. Whereas a home warranty could help you fix the leak, but not the damaged floor. Working together, the two policies could cover everything (less your deductibles), and help you avoid much of the costs of getting these items fixed yourself.
This scenario is why so many homeowners choose to protect their home and their budget as much as possible by having both homeowner’s insurance and a home warranty. Otherwise, these little surprises can turn into big homeowner headaches.
Interested in learning more about the differences between home warranties and homeowner’s insurance? Contact our experts at 888.351.3681 with your questions. Our team is available 24/7/365 and always happy to help! You’re also welcome to use our Contact Us form to get in touch.