How Does a Home Warranty Differ From a Home Insurance Policy?

If you own a home in Georgia, you know a variety of issues can occur, within and out of your control.

No question about it, you need proper coverage for when problem occur, whether insurance or warranty.

When it comes to home insurance and home warranties, many people mistakenly believe that both provide equal coverage.

A home warranty and home insurance policy both protect your home, but they do so in different ways.

However, important differences exist between the two types of coverage.

Let's take a look.

The Home Warranty

A home warranty serves as a service contract covering the repair or replacement of home systems and appliances that break down due to normal wear and tear.

For a monthly or yearly premium, homeowners receive protection against the high costs of repairs or replacements should their home systems or appliances fail.

In most cases maintenance can eliminate issues without needing repairs - but what happens if something goes wrong?

With a home, the likeliness of having expensive items break just as your protection plan is ending proves very real.

The cost of a home warranty relates to the amount of systems needing coverage. For example, some home warranty plans will also cover additional items such as pools and spas. The more likely the failure of one of these systems, the higher the cost to cover.

Homeowners should take care to read their home warranty contracts carefully to ensure they understand the coverage included in their plan.

The Home Insurance Policy

In contrast, home insurance policies cover the cost of repairs or replacement after a catastrophic event, such as a fire, severe weather, other damage, and even theft.

Home insurance also covers liability in the event that someone gets injured on your property.

It can even cover events not taking place on your property. For example, if your child accidentally breaks a neighbor's window while playing ball in your yard, your home insurance policy would cover the cost of repairs.

As a result, home insurance provides much broader protection than a home warranty.

Homeowners should purchase a home insurance policy that meets their needs and budget.

While the premium for home insurance is typically higher than the premium for a home warranty, the coverage provided proves much greater.

The Choice

While both types of coverage can be used for a single event, it's important to keep in mind that home warranties typically have lower deductibles than home insurance policies.

As a result, home warranties serve as more effective for routine maintenance, while home insurance protects against major financial losses.

In most cases, a home insurance policy will not cover the cost of repairs or replacement for items that break down due to normal wear and tear.

For this reason, many homeowners choose to purchase both a home warranty and a home insurance policy to ensure their home is fully protected.

It's important to have both types of coverage in place to protect your home and possessions. If you're unsure of what coverage is right for you, be sure to speak with a professional who can help guide you through the process. 

But most importantly, when you purchase a Home Warranty, you need to know the policy does not provide true insurance coverage over your home.

At Arrow Insurance, we target the right coverage for you. If you have any questions about the proper coverage for your new or existing home, give us a call, text, or email.

We will shoot straight and land on the best options available for you.