Home Insurance vs Home Warranty: Be Ready for an Emergency!

Aug 09 2021

Owning a home is one of the greatest and biggest investments you can make in your life. Your home is the place where you and your family will make memories and it becomes the place you feel safest. That’s why it’s important to protect it. Just by purchasing your home, you’ve probably heard of the terms home warranty and home insurance. These two are very different, and it’s important to know the difference so you can be protected properly. Let’s take a deeper look at what the differences between the two are, so you can be sure you’re making the right choice.

Home Warranty

home warranty sign on a stack of coins

How Does it Work?

Home warranties protect your home’s internal system and appliances. It is easy to get home warranty and home insurance confused because the contracts are very similar. However, the two are very different.

With home warranties, homeowners pay a yearly premium, generally between $300 – $600. That premium then covers the systems and appliances within your home. For example, if your air conditioner breaks down, instead of calling a repair company to come and fix it you would call your home warranty company. If it is covered under your home’s warranty plan, then the home warranty company will send out someone to repair it. Then, all you would have to pay is the service call fee, which is typically $60 – $100, depending on the company.

What Does it Cover?

Home warranties cover the main systems of your home. Such as heating, cooling, plumbing, and electrical systems. Your home warranty plan may even cover appliances, including:

  • Dishwashers
  • Ovens
  • Refrigerators
  • Washers
  • Dryers

While this can help homeowners save money when their appliances break, it is important to note that your plan won’t cover any damage caused by the malfunctioning appliance. For example, if your plumbing system burst, they will pay to fix the pipes but not any water damage caused by the pipes. For damages such as those, you’ll need to contact a restoration company, such as Rapid Restoration!

Home Insurance

man pulling out block that says "insurance on it" with house on top of the stack

How Does it Work?

If you’re paying a mortgage on your home, then you’ve probably been required by your mortgage lender to purchase home insurance. Home insurance covers your home’s structure and your personal property if it is damaged or stolen in an emergency. Home insurance may also cover medical expenses for injuries that were sustained during the emergency.

Homeowners pay a premium for homeowners insurance, typically around $300 – $1000, depending on the policy. How it works is if your home is damaged by a disaster that is covered under your policy, then you can call your insurance company and file a claim. Then, the insurance company will send someone out to inspect your home and the damage. After the inspection is complete, then your company will send you a check. It is important to note that homeowners will most likely have to pay a deductible if it is not yet met for the year. Home insurance deductibles can be anywhere from $100 – $2000. Typically, the higher the deductible, the lower the yearly premium is.

What Does it Cover?

Home insurance covers damages done to your homes structure and personal property from things such as:

  • Fires
  • Rain
  • Hail
  • Wind
  • Trees
  • Explosions
  • Theft

These are just a few things your home insurance policy may cover. Typically, these disasters are called “perils” on your contract. Some contracts will have “named-perils” policies that will only cover damage that is specifically listed. Other types of policies will cover larger numbers of tragedies than listed and will cover damages from everything except for the perils they specifically exclude.

Unlike home warranties, home insurance policies do not cover the actual system and appliances in your home if they break down. However, if one of those appliances were to cause damage, such as fire damage, then your home insurance will most likely cover it.

So What’s the Difference?

Home warranty and home insurance contracts are similar in many ways and operate nearly the same. However, it’s important to understand the difference between the two so you know your home is protected.

The main differences between home warranties and home insurance are what they cover. Home insurance helps you cover any structural damage and any loss of personal property from emergencies. Home warranties cover the repairs and replacements of your home’s system and appliances. Another difference is that home insurance is typically required and home warranties are by choice.

Protecting Your Home

someone covering model home with their hands

We suggest making sure that your home is fully protected, by having both home insurance and a home warranty plan. If there is damage done to the structure of your home, then you most likely won’t have to pay high costs with home insurance. If there is damage to your appliances or systems, your home warranty will likely cover the costly repairs or replacements. They both work together to protect nearly every part of your home.

How Rapid Restoration Can Help

We understand how confusing home insurance can be during the home restoration process. That’s why we’ll do our best to help you get the most out of your insurance policy. If you want to be a part of the insurance process or would rather leave it to us, we’ll work with both you and your insurance company! Contact us today and we’ll be happy to answer any questions you may have!

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