Home Warranty vs. Home Insurance

Understanding Coverage for House Repairs and Catastrophic Events with Home Warranties and Insurance

One of the downsides of owning a house: you are responsible for fixing the things that go wrong. Leaks, hail damage, appliances going out, trees falling – these are all things that unfortunately happen. You’ve probably heard of home warranties and home insurance, but what’s the difference between the two, and what do you really need?

The biggest difference is that a warranty covers things that happen with your house, while insurance covers things that happen to your house.

A home warranty is something you can only get when purchasing a home. If there is something that you are concerned about, like an old furnace, or roof, you can get a warranty to cover if you have to fix it. Warranties run around $500-$600 a year, which can save you a lot of money if you do end up needing to get that roof fixed. You can typically roll this cost into your loan or closing costs.

Home insurance is required to protect you from catastrophic loss. This covers things like fires, floods, and other weather damage – things outside of your control. Home insurance prices vary on the home and your deductible and are part of your monthly payment. Typically, the higher the deductible the lower the premium – though if you need to replace something, you would have to pay more out-of-pocket to cover the deductible.

In short, a warranty would cover a broken furnace or leaking roof, and insurance would cover a tree falling or fire damage. Have questions? Give us a call!

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