Home Warranty vs. Homeowner's Insurance

Home Warranty vs. Homeowner's Insurance

Many different real estate conditions cause confusion because they seem like they are referring to the same thing, but in fact are talking about very different things. Home warranties and homeowner’s insurance are two of these things. They provide security for your home and you, but in different ways.

Home WArranties

A home warranty is a policy generally bought by the seller prior to or at closing, however a buyer could buy one too. It covers the significant appliances and systems of a home and repairs or replaces them whenever they break during the policy period. The definitions of major appliances and systems differ from policy to policy, but they generally involve heating and air, plumbing, electrical, hot water heaters, dishwashers, stoves/ovens and garage door openers. If the fridge was at the home if it was bought or before the policy went into effect, it’s covered as well.


Home warranties are optional, but many sellers buy them as reassurance for buyers that any repairs or replacement of worn components in the home will not come from their pocket. This is especially valuable in places where resale homes are in strong competition with new homes, because the out-of-pocket maintenance cost to get a resale will be the same to get a new home. Home warranty businesses keep a set group of trusted local contractors around the prepared to look after repairs. The homeowner simply calls the guarantee company about the issue and the company calls one of its own contractors to come out and assess the situation. The contractor subsequently makes repairs or replaces damaged components if repairs cannot be made. The guarantee provider pays the contractor directly and fees that the homeowner a small fee designed to minimize nuisance calls.


Home warranties are not. Some cover items such as pools or septic systems as part of their policy, but some offer coverage for the very same items at an extra cost. They are not covered by policies . A seller or homeowner who’s looking to purchase a home guarantee should read the fine print on what is insured and some other conditions on that policy before buying the policy to make sure it covers all her requirements.

Homeowner’s Insurance

Homeowner’s insurance covers from damage and loss caused by fire, wind, hail, fallen tree and other natural acts, in addition to by theft and vandalism. Detailed insurance policies cover damages from accidental harm that happens on the property, especially if it involves a defect in the property. A good instance of this could be a slip and fall or medical accidents caused by an icicle that drops out of a roofline.


Homeowner’s insurance coverages are required by most lenders, as it protects their monetary interest in the property if anything major should happen, including a fire or substantial storm damage. Risks, or the natural acts , covered with these policies change. For instance, some policies cover storm damage, but will not cover hurricane damage. Others will not cover damage by any”act of God” including earthquakes, tornadoes or floods. A homeowner would need to get extra coverage in addition to his policy to pay for these acts. Many lenders require this extra policy if the home sits in an high-risk area, including mandatory flood insurance for homes located across a river.

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