What is the difference between home warranty and homeowners insurance? You know that having protection in case of a broken appliance or fire is a smart plan, but which type is right for you? Read on to learn what’s covered by a home warranty vs. home insurance.

Home Warranty vs Home Insurance

While both optional plans cover repairs to your home, there’s a difference between home insurance and home warranty.

Home Warranty

Home warranties cover repairing or replacing appliances and systems in your home – like your dishwasher or central air conditioning.

  • As an incentive, sellers may offer to pay for one year of home warranty at closing.
  • A homeowner can purchase a warranty at any time.
  • You’ll pay a monthly or yearly fee.
  • When an issue arises, the warranty company will also charge a small set price for a service provider to visit your home, assess the issue, and determine if it’s covered by your home warranty. If it is, they’ll fix it.
  • While warranties cover a variety of home expenses, such as repairing or replacing your kitchen appliances, limits do apply.
  • Check with your warranty provider to learn what is and isn’t covered by your home warranty.

Home Insurance

Home insurance, also referred to as homeowners insurance, protects you in case of a covered event, such as theft or natural disaster. In those instances, home insurance will help pay for the costs associated with rebuilding or replacing your home and affected appliances.

  • Lenders typically require a minimum amount of home insurance to finance your mortgage.
  • Home insurance usually won’t cover the cost of replacing or repairing appliances or systems, unless damaged during a natural disaster or fire.
  • Your policy may include liability coverage. This covers legal and medical expenses if a visitor gets injured on your property.
  • Just like with a warranty, your carrier will place limits on coverage. Be sure to discuss what’s covered in potential policies when shopping for insurance.

Is a Home Warranty Considered Insurance?

No, a home warranty isn’t considered insurance and it doesn’t replace homeowner’s insurance. A home warranty is a type of service plan for specific home appliances and systems. Don’t think of it as one or the other, like home warranty vs home insurance. You may need both to be properly protected.

How Do I Know if I Have a Home Warranty?

If you’re buying your first home, ask your real estate professional if there’s a one-year home warranty at closing. If not, and you decide you’d like one, do some research to decide if a warranty is right for you.

Still need some advice? Speak to a BHHS Fox & Roach real estate professional. As part of our advisory role, we always discuss whether a home warranty plan makes sense. We want you to be fully informed during the home buying process. If you decide to purchase a plan, we can also provide referrals to reliable home warranty providers.