Have you ever wondered what the difference was between a home warranty and home insurance? Both protect a house’s systems and appliances and a homeowner's pocketbook from costly repairs, but what exactly do they cover? Do you need both? Can you get just one?
Take a look at our infographic: The Difference Between a Home Warranty and Insurance to see why you need both on your house.
This house has a lot of problems going on with it -- a fire, a leaking toilet (and consequently, a flooded living room), a broken garbage disposal, a non-heating oven, a smoking air conditioner and a broken roof. Hopefully a real house would never have all of this happening at once! The differences in coverage between a warranty and insurance policy can easily be seen with this infographic.
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What Does a Home Warranty Cover?
A home warranty covers the main systems and appliances in your house. This includes the plumbing, heating and cooling, electrical, washer, dryer, oven, fridge and more. A homeowner calls their home warranty company and explains the problem that’s going on with the system or appliance. The homeowner pays a flat rate service fee, the company then calls a contractor, who goes to the house and diagnoses and fixes the problem. This saves the owner thousands of dollars in costly repairs, especially if the system or appliance that is malfunctioning has to be replaced. Home warranties lack coverage in paying for damages caused by these malfunctioning systems or appliances. Like the house in the infographic, a toilet could leak, which would be covered by the warranty. However, the damage caused by the leaking toilet would not be covered by the home warranty - luckily, it would be covered by insurance.
What Does Home Insurance Cover?
Generally homeowners are required to have insurance, especially if they have a mortgage. Insurance covers damage to a house's structure from fires, rain, hail, wind, trees, floods and other disasters. It also covers an owner's belongings if they are damaged in any of these tragedies, or if they are stolen. Having an insurance policy can provide relief to an owner if there is a flood or a fire, but if that flood or fire is caused by a malfunctioning plumbing or electrical system within the house, the owner has to pay to have the appliance fixed out of their own pocket. Of course, if they have a home warranty, both sides are covered.
A House Needs Both: A Home Warranty and Insurance
Homeowners need both insurance and a warranty. If there is damage done to the structure of the house, the owner won’t have to pay extreme amounts of money to repair it if they have insurance. If the damage to the home's structure or homeowner's belongings was brought about by a malfunctioning appliances or systems, a home warranty can help to cover the costly repairs or replacement that await. If you have a house and only have insurance, think of the systems and appliances that aren’t covered!