Many homeowners confuse home warranties with home insurance, but these two forms of protection serve very different purposes. Understanding these differences is crucial for ensuring your home has comprehensive protection.
Key Differences
Home Warranty:
- Covers normal wear and tear
- Protects appliances and systems
- Optional coverage
- Service call fee model
- Annual contract
Home Insurance:
- Covers unexpected damage
- Protects structure and belongings
- Required by mortgage lenders
- Deductible model
- Liability protection
Coverage Comparison
Here's what each type of protection typically covers:
- Home Warranty Covers:
- HVAC systems
- Electrical systems
- Plumbing systems
- Major appliances
- Home Insurance Covers:
- Fire damage
- Storm damage
- Theft
- Personal liability
When You Need Both
Scenarios Where Both Are Valuable:
- Older homes with aging systems
- High-value properties
- Rental properties
- First-time homeowners
- Homes with expensive appliances
For complete home protection, many homeowners find value in having both a home warranty and home insurance. While insurance protects against unexpected disasters, a warranty helps manage the inevitable wear and tear of home systems and appliances.