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Home Warranty vs. Home Insurance

Home Warranty vs. Home Insurance

A home is the biggest investment in the life of an average American. This investment comes with numerous costs. Asset-building creates numerous financial burdens, such as a mortgage, settlement costs, and most importantly, insurance. Homeowners must take adequate measures to protect their investment against numerous hazards. 

Home insurance provides coverage to recover one's investment in the event of a calamity, fire, or weather-related destruction. Homeowners are faced with the conundrum of choosing the right insurance product to protect their investment. The home warranty vs. home insurance debate is a perplexing one, as both are equally advantageous and protective. But which one is better?

Homeowners are often offered home warranty coverage while buying a new house. These two products offer coverage during emergencies and substantial financial protection, but they are quite different. You see, a home insurance policy is not a warranty. Homeowners must always consider the possibilities of extensive repair or replacement while making this decision.

It is vital to understand the benefits associated with a home warranty and home insurance. If you’re a first-time homebuyer, keep reading to learn more about the protections offered by both these products. 

Protecting Your Asset 

Homeowners seek out insurance products to protect their investments and make smart financial decisions. A homeowner's insurance policy and home warranty offer coverage for the property, systems, furniture, and fixtures, and appliances. Both these products are equally beneficial to assist with repair or replacement in emergency events. But how is a homeowner's insurance different from a home warranty?

We will dive into the depths of these two products, but let’s quickly take a look at the major differentiating elements. Home insurance typically offers coverage for emergencies such as natural disasters, theft, or fire. A home warranty will protect the investment and offer coverage for the repair or replacement of appliances and home systems. It even offers coverage for deterioration due to normal wear and tear. 

Home Insurance: What Does It Offer?

A home insurance policy offers coverage for all accidental damage to the property and belongings. It offers coverage for emergencies caused by natural disasters, fires, storms, and burglaries. Essentially, a home insurance policy covers four basic areas:

  • Interior and exterior of your home
  • Personal belongings in case of theft
  • Loss or damages
  • General liabilities if an individual is injured on the policyholder’s property. 

In most cases, a home insurance policy is a mandatory requirement. A lender is likely to ask the borrower to acquire a home insurance policy before issuing a mortgage loan. This policy is renewed annually, and homeowners incur a yearly expense ranging from $300 to $1000. All home insurance policies come with a deductible, which is the cost homeowners pay out of pocket after a claim is made. Then, the policy covers all additional expenses beyond that. 

For instance, if there is flooding in the basement, the policyholder can obtain coverage for repair and replacement. An insurance adjuster will visit for an inspection and fill out a claim for the repair or replacement of damaged items. After the claim is approved, the insurance provider will deduct the charges and issue payment for repairs. Homeowners can also use the deductible to lower their overall annual policy premium costs. 

It is important to remember that the higher the deductible, the lower the annual home insurance policy expenses. 

Home Warranty: What Does It Offer? 

A home warranty is a service contract that offers coverage for the repair or replacement of appliances and system components. Homeowners choose this policy to enjoy financial coverage for the standard wear and tear and age-related deterioration of appliances and home systems. These systems and appliances include:

  • HVAC system
  • Electrical systems
  • Plumbing systems
  • Kitchen appliances
  • Washer/dryer

Many home warranty contracts extend coverage to larger systems, such as swimming pools, spas, and others. These warranty contracts come with 12-month period terms, but they are not a mandatory prerequisite to obtain a mortgage. It’s a smart investment but is purely a choice that a homeowner can make, should they deem it necessary. 

Most home warranty combo plans for appliances and systems come with a monthly cost of $75. The costs increase as homeowners add additional appliances, such as pool systems or refrigerators. 

For instance, if the HVAC system breaks down, a home warranty will help cover the cost of repair or replacement. A licensed technician will come for a detailed inspection and assess the problem. This assessment determines whether the HVAC system has broken down due to age-related deterioration or other terms added to the service contract. 

If the cause of the breakdown is covered within the terms of the contract, the contractor will perform the repairs or replacement. One service call will ensure that the HVAC system is repair or even replaced, should the need arise. Depending on the policy, the homeowner will have to pay a one-time service cost, around $125. The home warranty will provide coverage for the entire expense. 

A home warranty is a very smart investment as it helps save thousands of dollars in out-of-pocket expenses. Homeowners also get to escape the hassle of finding trusted and licensed contractors to perform the necessary repairs. 

So Should I Get A Home Warranty Or Home Insurance?

The home warranty vs. home insurance debate isn’t actually a debate at all. These are not rival products, but rather, they both complement each other. Homeowners must prepare for future damages, catastrophes, and broken-down appliances to enjoy financial stability and independence. While home warranty and home insurance have similarities and differences, together, they solidify financial security and stability. 

Homeowners can best protect their interests by maintaining both a home warranty and a home insurance policy. Maintaining both policies can prove financially burdensome, but it can also help save thousands of dollars. It is wise to shop around and examine the products offered by multiple insurance providers.


Quote Lab is a trusted platform that equips homeowners with digital research tools so they can explore the market with convenience. They can apply for home insurance quotes from multiple carriers and compare their quotes and prices. Quote Lab powers market research with digital tools to shop around and conduct an in-depth overview of the entire market. 

It is wise for a homeowner to assess their insurance coverage needs. There are various factors to monitor here, such as the possibilities of natural disasters, such as floods and tornadoes. Homeowners must consider the age and running capacities of their appliances and home system. The home warranty vs. home insurance is a difficult decision to make, but determining priorities is instrumental.

Quote Lab offers homeowners a reliable resource to find the right home insurance policy for their coverage needs.