Home Insurance and Home Warranty: What is the Difference?

Dated: January 19 2021

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As much as the terms, home insurance and home warranty might seem alike; they are two different concepts. While both of them are meant for a similar purpose, i.e., to offer protection, both of them provide different types of protection and security. 

We understand how tricky and confusing these two terms can be for a layman. Hence, in this article, we have defined what each of these terms covers and why you should and must consider purchasing them. After all, owning a home is probably one of the greatest decisions you will ever make in terms of investment. Hence, protecting your assets is imperative.

The best way to protect your home is to purchase both a home insurance policy and a home warranty. Both of these policies will cover your home belongings and appliances in case they require replacement or repair.

Let’s move on to the technicalities now!

What is meant by home insurance?

What is home insurance?

Home insurance refers to a policy that covers any damage that an accident or disaster causes to your home and other belongings. It includes damages caused due to robbery, fire, or natural disasters such as storms. The home insurance policy covers four primary areas, namely, the interior and exterior of the home, the personal property in case of burglary or loss, and general liability if a person is injured within the premises of the property.

It is pertinent to mention that each and every home insurance policy comes with a deductible. This is the amount you will pay when you make a claim. The policy is meant to protect you should any additional costs arise.

Moreover, a home insurance policy is usually a mandatory requirement. Generally, a bank will ask you to acquire one before it issues the mortgage. Additionally, the policy is renewed on an annual basis.

What is a home warranty?

A home warranty, on the other hand, refers to a service contract. It is meant to provide repair or replacement for appliances that stop functioning due to age or typical wear and tear. This can include all of your electrical, plumbing, and kitchen appliances. Additionally, washer or dryer and larger systems such as pool and spa, may also fall under home warranty. 

Home warranties offer contract terms that cover 12 months. Unlike a home insurance policy, a home warranty is not mandatory to obtain a mortgage.

Especially since they cover different things, we suggest that you have both policies in place in case disaster strikes! 

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Valerie L. Cortez

Valerie Cortez is the owner and managing broker of JPAR Rocket City. JPAR Rocket City espouses the Values of Productivity and Service in our offerings and our culture. As a brokerage, we provide what....

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