Owning a home is the one of the greatest investments you'll make in your life and protecting that investment is crucial. Investing in both a homeowners insurance policy and a home warranty is the best way to protect your home.
Differences Between a Home Warranty and Homeowners Insurance
Your mortgage lender usually requires homeowners insurance to protect the structure of your home against risks such as damage from severe weather, theft, and secondary damages resulting from some system and appliance failures. Homeowners insurance also protects you personally from liability in the event that someone is accidentally injured on your property. Each time you make a claim on your home insurance you pay a deductible cost, which is commonly $500 or $1,000.
These service contracts protect many of the home systems and appliances that you rely on daily. When these systems and appliances inevitably fail over time due to normal wear and tear, a home warranty will pay to repair or replace them. You will pay a service fee each time you request service, which ranges from $50 - $100.
Home warranties and homeowners insurance can work together to fix one problem in some cases. For example, let’s say a pipe were to burst in your home and cause damage to your floors. You’d rely on your home warranty to take care of the repair or replacement of any covered damage to the pipe, and you’d file a claim with your homeowners insurance for any covered repair or replacement to your damaged floors.