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Home Warranty vs Homeowners Insurance: what’s the difference

Home Warranty vs Homeowners Insurance is a tricky question. Let’s see why it is necessary to have both policies.

What is a Home Warranty?

Home Warranty is a contract for the maintenance of your home. It provides for the repair, replacement of system components and devices that fail due to age or normal wear and tear. For example, it can be air conditioning, plumbing, or electrical.

This list may vary depending on the type of policy you choose. 

So, it can include the following items:

  • water pipes
  • sewerage
  • air cooling system
  • heating system
  • electric or gas stoves
  • washing machine and dryer
  • fridge
  • pool
  • alarm


If you are in the process of buying a house

You should immediately request payment for such a policy from the seller. So, you will save money and be able to play it safe. Imagine if any of the components or devices fail after the keys are handed over. Thanks to the policy, you will not have to pay large sums for the repair or replacement of faults.

If you are selling real estate

In this case, it is worth buying a seller’s package from a reliable company that deals with Home Warranties. The cost is from $ 60 per policy, payment occurs at the time of registration of the sale.

The cost of a Home Warranty can range up to several hundred or even thousands of dollars. Its price depends on what components you want to include, the area of ​​the house, and the presence of a pool. The larger your property and the more different equipment it contains, the higher the price.

Pros of home warranty:

  • device repair and replacement coverage
  • you do not need to look for masters on your own or look for a contractor
  • significant cost savings, because the home guarantee will cover most of the cost of the work


Cons of home warranty:

  • the repair company may not cover all breakdowns
  • sometimes, it can be expensive — you may be asked to pay additional costs
  • limited choice of specialists — often the contractor company cooperates only with a certain pool of masters
  • the possible limit for frequent repairs


Validity of Home Warranty

In most cases, it is valid for one year. After this period, you either need to buy Home Warranty again, or pay for repairs, replacement of your high-tech equipment, or any other breakdown on your own. The older your home, the more relaxed you will feel with Home Warranty.

What is a Homeowners Insurance policy?

For many people, buying property is the biggest investment of their lives. Therefore, it is necessary to approach the issue of insurance of this capital with full responsibility. If there is a fire, flood or earthquake, or any unforeseen situation, you can lose your home in one day.

Restoring your home and property will require finance that you may not have at the moment. That is why a well-chosen Homeowners Insurance will help you restore not only the house but also the property in it.

The insurance policy covers:

  • building your home
  • roof
  • windows
  • responsibility for an accident in your home


For a fee, other additional conditions can be included in the insurance policy. This will make your life in the house much more peaceful. In any case, you will be able to receive money to recover from the damage suffered.

Therefore, we decided to describe the main mistakes homeowners make when applying for insurance:

  • Insufficient insurance coverage. Often, homeowners are so eager to save money that they buy a cheap insurance package. As a result, they simply won’t get adequate coverage in the event of an emergency.
  • Misjudgment of real estate value. The such property simply may not be covered by an insurance policy.
  • Risk inconsistency. You need to think about everything in advance — for example, if you live in an old house or in a region where floods often occur. All these cases must be indicated in the insurance.


Mortgage purchase insurance

If you have a mortgage on your home, the bank will oblige you to purchase insurance on its terms. When you get a home loan, you are required to buy an insurance policy for at least the amount of the mortgage. In addition, the insurance company will calculate the minimum amount for which you need to insure the house, buildings on the land, as well as your property.

Homeowners Insurance not only gives you the opportunity to have additional insurance for damages but also to choose specialists for the elimination of the consequences and subsequent repairs. 

Home Warranty vs Homeowners Insurance: what to choose 

As long as the Home Warranty is in effect, you will have to put up with any repairman who is not chosen by you, but by your warranty company. At the same time, processing claims through Homeowners Insurance gives you a lot of freedom, including the ability to choose a plumber, electrician, or contractor among those professionals whom you truly trust.

The insurance policy is valid for a year. Before the policy expires, about a month in advance, we recommend that you contact your insurance agent and be sure to ask for the price of your new policy. As you know, the cost of the insurance policy is included in your mortgage payment, and if the amount of the insurance policy increases, then the monthly payment for the house increases accordingly.


Home warranty vs home insurance are two different types of protection for your home and its contents.

However, it is often recommended to have both types of protection — both a home guarantee and home insurance. This will provide you with complete protection and coverage for various types of risks. From repair to theft.

It is clear that we never want to think about sad things or bad events. But life is such that it is often necessary to see the negative consequences in advance. And try to protect yourself from them. And also, your house and your property.

In matters of security, we always recommend contacting professionals. We will offer you a variety of insurance solutions that can take into account all the nuances and make life in the house comfortable. For more information, please consult LBC Mortgage.


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