Home Warranty or Home Insurance?

Bottom line? You need both: home warranties and home insurance policies fill separate needs.Here’s a guide to the two types of coverage that can help with your home repairs.

Similarities

Home warranty and a home insurance policy can help replace or repair a part of your home or its contents. Warranties and home insurance policies also have deductibles.

Differences

Home warranties and home insurance don’t overlap. Here’s why.

When they’re applied: Home insurance policies take effect after certain events aka covered perils. For example: Damage caused by wind, hail, fire or lightning, you would turn to your home insurance policy to help repair or replace your house or its contents. A home warranty repairs or replaces covered components in your home when they break from normal wear and tear or age.

What they apply to: Have a washer that needs fixing? Use your home warranty for that. Warranties replace or repair the major systems (such as electrical and plumbing) in your home and appliances such as your refrigerator or oven. Some roofs come with warranties. However, most home warranties cover mechanical systems.

If the structure of your house or its contents are damaged by a covered peril, you turn to home insurance, which safeguards certain aspects of your home life. Home insurance helps pay to protect you against lawsuits for injuries that occur on your property and reimburses your living expenses while your house undergoes repairs.

How they apply: Your warranty is tied to your house and its unmovable systems. Your electrical system can remain protected by the warranty even if you move before the contract ends. Your home insurance is tailored to your home and you. Insurance providers base premiums and coverage on a variety of factors: House characteristics, personal characteristics and location.