Home Insurance vs. Home Warranties: Which Should You Get?

When it comes to protecting your home, understanding the differences between home insurance and home warranties is crucial. Both offer valuable coverage, but they serve different purposes and cover various types of risks.

What is Home Insurance?

Home insurance is a policy that can help financially protect your home and personal property against damage or loss caused by events such as fire, theft, vandalism and severe weather. It can also offer liability coverage if someone is injured on your property. Mortgage lenders typically require home insurance, which can be essential for safeguarding your financial investment in your home. The coverage limits are usually higher, and it can include additional options like equipment breakdown coverage.

What is a Home Warranty?

Home warranties, on the other hand, are agreements that offer coverage for the repair or replacement of significant home systems and appliances that break down due to regular usage. This can include items like HVAC systems, plumbing, electrical systems and kitchen appliances. Home warranties are optional and are often purchased by homeowners who want an extra financial safety net.

Key Differences

The following are key differences between home insurance and a home warranty:

• Coverage—Home insurance can cover damage from external events, while home warranties can only cover internal mechanical failures.

• Requirement—Home insurance is usually mandatory for homeowners with a mortgage, whereas home warranties are optional.

• Cost—Home insurance premiums are generally higher and depend on the value of the home and its contents. Home warranties have lower annual fees but may include service call fees for each repair.

Which One Should You Get?

The decision depends on your needs and circumstances. If you have a mortgage, home insurance is nonnegotiable. However, a home warranty can be valuable if you have older appliances or systems prone to breaking down. For well-rounded protection, consider having both. Home insurance can help cover major disasters, while a home warranty can help handle the smaller, everyday breakdowns.

Learn More

For home insurance guidance near you, contact All American Hallmark Insurance LLC.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.