Confusion often arises when comparing Homeowners Insurance Vs Home Warranty and their unique benefits. It’s not uncommon for people to ask whether a home warranty’s worth it, especially if you already have homeowner’s insurance.
The important thing is that both policies are unique in helping you save on sudden costs related to unforeseen issues. We’ll walk you through the details of homeowners insurance vs a home warranty and show you which you need as a homeowner (or even as a home seller).
What are the Differences between Homeowners Insurance Vs Home Warranty?
A home warranty goes by many names and is sometimes referred to as home appliance insurance or a homeowners warranty. It typically covers the repair or replacement costs for various appliances and home systems that experience breakdowns from everyday wear and tear.
Home warranty plans can be customized to cover specific appliances and systems unique to your home, such as HVAC units, refrigerators, ovens, dishwashers, electric dryers, etc.
Homeowners insurance, also known as home insurance, covers your home and appliances from damages and losses caused by perils such as fire, theft, wind, hail, etc. It’s also typically required when applying for a mortgage.
What does a home warranty cover that homeowners insurance doesn’t?
In most scenarios, a home warranty covers items that homeowners insurance will not. What a home warranty covers varies depending on your plan.
Basic coverage typically includes your:
-
-
- Washing machine and dryer
- Stove, cooktop, and oven
- Built-in microwave
- Dishwasher
- Garbage disposal
- Refrigerator and freezer
-
More advanced coverage can also shield your home systems:
-
-
- Electrical system
- Toilet and plumbing system
- Air conditioning and cooling
- Ductwork
- Water heater
- Heating system
-
Beyond home systems and appliances, you can add additional protections through your home warranty. This includes swimming pools, hot tubs, sprinkler systems, wells, and more. There are several lesser known items a home warranty covers that most people are surprised and excited to learn about.
One must be mindful of exclusions and coverage limits when choosing the right home warranty plan for them. Read the fine print, as you should always know what’s protected under your agreement.
Homeowners insurance coverage varies from state to state and depends on how frequently certain events occur. Standard homeowners insurance covers the dwellings and other structures on your personal property, as well as personal belongings.
Insurance may also include liability coverage, which relates to accidents that occur on your property. For example, if someone is hurt, homeowners insurance will cover medical fees, unpaid wages, or settlements if you are sued. In these cases, you’ll need to coordinate with your insurance company directly to determine next steps.
Some of the most common things homeowners insurance covers include the following:
-
- Fire and smoke damage
- Lightning strikes
- Wind damage
- Vandalism
- Theft
- Hail, snow, and ice damage
- Falling trees
- Riot or commotion
- Damage caused by aircraft or vehicle
- Explosion
How does the home warranty process compare to homeowners insurance?
The claims process for homeowners insurance vs home warranty comes with some key differences. Here’s a quick breakdown to make things clear.
Deductibles vs. Service Fees
With homeowners insurance, you’ll need to pay a deductible before your insurer covers the rest of the loss. On the other hand, home warranties typically charge a smaller service fee when you request a repair.
Who You Call
For home warranties, you’ll contact your warranty provider to file a claim. But with homeowners insurance, you’ll reach out to your insurance carrier instead.
Who Handles the Claim
A technician from the home warranty company will evaluate claims for repairs under your warranty. Meanwhile, homeowners insurance claims are assessed by an adjuster from your insurance provider.
Additional Costs
You may have to pay more than your deductible or service fee if your policy doesn’t cover the issue if repair costs exceed your coverage limit, or if you opt for premium upgrades.
Waiting Periods
Some home warranty companies require a 30 waiting period before you can file your first claim, so keep that in mind when signing up. Homeowners insurance typically has a 30 to 90-day waiting period before policyholders can file claims.
Knowing these differences can help you navigate both options with confidence!
If you have a home warranty, the claim process is simple.
Let’s say you experience a breakdown on your dishwasher that occurs after the manufacturer’s warranty has expired. Requesting service is easy:
-
- Call your home warranty provider to file a claim.
- Customer service will schedule a qualified technician to come out and assess the problem.
- The costs of repairs or replacement can be covered according to the terms of your contract.
Since repairs can be costly for home appliances and other systems, you may save hundreds or even thousands of dollars.
The claim process for homeowners insurance is as follows:
Filing a homeowners insurance claim doesn’t have to be overwhelming. Here’s an easy-to-follow guide to help you navigate the process step by step.
-
- Reach out to your insurance company to report a claim as soon as you notice the damage. The sooner, the better!
- Gather Your evidence, such as taking photos, finding receipts, and collecting any documents that show the extent of the damage. Getting repair estimates can also help.
- Before your claim moves forward, you’ll need to pay your deductible.
- Your insurer will assign a claims adjuster to evaluate the damage and review your claim.
- The adjuster will provide an initial offer. Keep in mind it might not fully cover all your losses right away.
- Choose a contractor or repair shop you trust to handle the fixes.
- Once the repairs are done, your insurance company will issue the payment.
Following these steps ensures a smooth claims process and helps restore your home efficiently.
What are a home warranty’s advantages over homeowners insurance?
Eventually, machines and systems start to wear down during the course of regular use. These types of breakdowns aren’t covered under homeowners insurance.
Why should you be financially responsible for mechanical failures that occur from using appliances and systems as they’re designed? A home warranty can have your back when you need it most.
-
- A home warranty can also boost the value of your home when you decide to sell, as they’re completely transferrable. Buyers will be interested in having coverage for the appliances and systems they’re inheriting.
- Most real estate agents are keen to list a home warranty as one of the selling points of a home.
- A home warranty can also be purchased by the buyer after closing on the home.
How much does a home warranty cost compared to homeowners insurance?
When comparing costs for homeowners insurance vs home warranty, the difference can be quite substantial.
The cost of a home warranty will vary from state to state, but you can generally expect to pay less than $100 per month. SHW offers home warranty plans starting at $36 per month.
Home warranty plans are flexible, and extra coverage can be added to set plans after the start date. This allows you to customize the warranty to your needs as you enhance and renovate your home.
It should be noted that service call fees do apply. This day-of-service fee usually costs between $60-$150, depending on your provider. Select Home Warranty service fees range from $60-$120, depending on your service contract.
The upside to that cost is saving the time involved in trying to find the right professional for the job. Home warranty companies like Select handle all the heavy lifting, freeing you up to focus on other things.
The general estimate for homeowners insurance is about $1,854 per year, according to Forbes. That comes out to around $154 per month.
Different home insurance providers have their own formulas for pricing. This causes the rates to vary widely, so it’s important to take your time and research each company carefully. You could end up saving hundreds by shopping around.
Generally, homeowners insurance coverage will cost you much more than a home warranty.
Home warranty vs homeowners insurance: which do you need?
Hope that, after a detailed comparison of homeowners insurance vs home warranty, it is clear that you need both if you want peace of mind when it comes to comprehensive home coverage.
Insurance and warranties protect completely different aspects of your house, from the structures on your property (insurance) to the systems and appliances you depend on every day (warranty). Moreover, a home warranty adds value to your home, giving you an advantage in the real estate market when you decide to sell.
Setting up a home warranty is quick and easy. Start off with your free quote, and one of our experts will reach out to you shortly.
