Home warranties and home insurance are two different types of coverage. Home warranties cover a variety of repairs, but not for items or situations where the problem is caused by negligence or abuse on the homeowner’s part.
Conversely, home insurance covers any damages to your property as well as personal injury from accidents occurring at your residence. This blog post explores the differences between these two types of policies so you can make an informed decision.
Difference Based on Cost
Home warranty plans average around $594 depending on the size of your home, whereas homeowners insurance premiums are usually higher than that amount for a comparable policy. The average annual premium for homeowner’s insurance is about $850, while an extended service plan averages around $450 annually.
Difference Based on Coverage Type and Reimbursement Amounts
Home warranties cover the repair of items. On the other hand, homeowner’s insurance covers any damages to your property as well as personal injury from accidents occurring at your residence.
The reimbursement amounts for both types of coverage vary. Home warranties typically reimburse homeowners for a percentage of the repair cost, while home insurance reimburses up to a set dollar amount that varies by policy and the deductible chosen.
Home warranty plans cover appliances such as refrigerators, washers, dryers, and dishwashers. Homeowner’s insurance does not cover these items.
Difference Based on Who Is Covered and Where It’s Available to Purchase
Home warranties are available for single-family, duplex, triplex, fourplex, condo and mobile homes. Similarly, homeowners insurance is available for one or two-family rentals and multi-unit dwellings.
Home warranty plans typically are offered during a real estate transaction or you can purchase one for an existing home at anytime. Homeowner’s insurance is available through local agents.
You should purchase a home warranty plan if:
- You plan to sell your house soon or buy a new one and want to provide yourself with some protection against future repair costs.
A homeowner should purchase home insurance if:
- You want coverage for all types of damage to your property
- You are looking for personal liability protection if someone is injured on your property or if you accidentally injure them yourself
You should get both a home warranty plan and homeowner’s insurance if:
- Your house needs repairs regularly due to normal wear and tear
- You want protection for all types of damages to your home, whether it’s from a broken dishwasher or storm damage.
Conclusively, both a home warranty plan and homeowner’s insurance are helpful for homeowners. The key is to get the correct type of coverage at a price you can afford.