Home Warranty vs. Home Insurance: Which One Should You Get? 

Every homeowner fears unexpected breakdowns in their home appliances or systems. If an appliance malfunctions, who would shoulder the burden of repair or replacement costs? Home warranty and home insurance are two forms of protection that can come to your aid in such circumstances. But there are specific characteristics that set these apart.


Home insurance primarily offers coverage for damages to the physical structure of your home, personal belongings, and liability in case of injuries. On the flip side, a home warranty focuses on repairs and replacements of home appliances and systems that suffer from regular wear and tear. We have discussed the differences between a home warranty and home insurance based on a new blog article from the writers at Cinch Home Services, a popular home warranty service provider. Let’s take a look. 


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They have different coverages

Home insurance offers protection for the structure of your home such as the foundation, roof, walls, and other structural components. It also covers personal belongings such as furniture, electronics, and other items. Moreover, home insurance includes liability coverage, which safeguards you in case of personal injury on your property, necessitating medical attention or legal support. 


On the other hand, a home warranty provides repair and replacement services for appliances and systems excluded by home insurance contracts. This includes heating and cooling systems, plumbing, electrical systems, and kitchen appliances. 




Their contracts have different exclusions

While home insurance policies typically exclude coverage for floods or earthquakes, you have the option to get separate policies specifically for those events. Home warranty contracts also have their own set of exclusions, such as pre-existing conditions or improper maintenance. Pre-existing conditions are issues that existed prior to the contract’s start date and are not covered. Improper maintenance refers to the lack of adequate care for an appliance or system which can lead to damages that won’t be covered. 




Home warranty and insurance have different cost

The typical yearly expense for home insurance is $1,784 on average in the United States and £140 in the UK, and can fluctuate depending on factors such as location, coverage amount, and deductibles. A home warranty costs approximately $600 to $800 per year (it is lower in the UK as often you take out home warranty on separate items), with variations depending on the plan type, service fee or deductibles, and any additional inclusions in the plan. Despite the striking contrast in costs, having both home insurance and a home warranty ensures complete coverage for your home and personal belongings. 



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Fees and deductibles are different for both

For home insurance, deductibles are a predetermined sum which typically varies from $500 to $2,000. You must pay it upfront before your insurance coverage takes effect. For home warranties, service fees are paid per service request and generally fall within the range of $50 to $125 depending on the provider and plan. Unlike deductibles, service fees remain constant irrespective of the repair or replacement cost.  


Home warranty service fees are often more cost-effective than insurance deductibles, making them a more affordable alternative for your financial considerations. 




They have different claim policies

Home insurance policies are specifically crafted to provide coverage for unforeseen and sudden events that result in damage to the home or personal belongings, such as fires, theft, or natural disasters. On the other hand, you claim home warranty when appliances or home systems experience failure due to regular usage. The claims process for home insurance is usually complex and time-consuming. It requires you to record the proof of damage, file a claim, and wait for an adjuster to evaluate the situation. With a home warranty, you can easily contact the warranty provider over a service call to repair or replace the item covered by the warranty. 




Home warranty and insurance have different renewal policies

The renewal process for home warranty policies varies based on the provider and plan type and has monthly or yearly options. In contrast, home insurance is typically renewed on an annual basis. This flexibility allows you to have greater control over your coverage and make adjustments as necessary. Certain home warranty providers even allow customisation by adding or removing specific appliances or systems. However, some providers may increase the premiums with each renewal, so select a plan that aligns with both your budget and requirements. 



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Both are not required by law

While home insurance is frequently mandated by lenders as a condition for getting a mortgage, a home warranty is not legally required. Home insurance plays a crucial role in safeguarding the lender’s investment in the property and is typically imposed by mortgage companies. A home warranty, however, is discretionary. You have the choice to purchase it, providing coverage for the repair or replacement of home appliances and systems, but you’re not obligated to buy it. Although a home warranty is not legally obligatory, it offers peace of mind and the potential to save money on necessary repairs and replacements. 



Both have different service providers

When making a home insurance claim, an insurance adjuster assesses the damage, calculates repair expenses, and discusses settlement with you. In the case of a home warranty, claims are typically managed by contracted service providers with proper licensing and insurance. These experts specialize in repairing and replacing home appliances and systems. Home warranty providers maintain a network of pre-approved service providers whom you can contact to schedule the necessary repair or replacement services. These service providers undergo background checks and must meet specific qualifications and standards established by the home warranty company. So, you can expect quality service from them. 



Building a house can be challenging and exciting at the same time. As a homeowner, understanding the distinction between home warranties and home insurance is very important to decide which one is the best fit for you. Home insurance primarily safeguards your home structure. On the other hand, a home warranty takes care of repair and replacement costs for home appliances and systems. Each option has its own advantages and limitations, so thoroughly assess your requirements and select the appropriate coverage for your home. 


Home Warranty vs. Home Insurance: Which One Should You Get? 


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