Life is complicated, insurance doesn't have to be.
Read time: 2:30
Home insurance and home warranty…they sound similar
and even seem like they mean the same thing, but there are
actually some pretty big differences.
Read on to learn more about some of the bigger differences
between home insurance and home warranty plans and how they could be
beneficial to you and your property.
Let’s start with the basics.
Home insurance provides coverage for:
One thing that is not typically covered by a basic home
insurance policy is “wear and tear.” This can be confusing as many
would assume that if an item wears out, it will be covered by their
insurance. But, for insurance, the
damage needs to be “sudden and accidental.”
Some insurance carriers offer add-on coverages that can be
applied to a basic home insurance policy, which can cover some types
of “wear and tear” exposures. Home insurance and its coverages can
vary greatly from company to company or even policy to policy.
Working with an independent agent will help ensure that all the
coverages you need are added to your policy.
Read more: How
to Select the Best Homeowners Insurance Coverage
So, what does a home warranty cover?
A home warranty usually covers damages to appliances and home
systems that can be expected such as:
Unlike home insurance, a home warranty does not cover the
actual home or structures at the location despite the name sounding
like it’s a warranty for the home itself. Rather, it’s usually a
warranty for certain things that are inside or a part
of the home.
There are instances where coverage could overlap between home
insurance and a home warranty – especially if a home insurance policy
has special coverages added to it. For example, say you have a basic
home insurance policy and a basic home warranty as well – if your
furnace is old and stops working, it could be covered by the home
warranty since it was old and expected to have issues.
Read more: 7
Things Nobody Tells you About Homeowners Insurance
However, let’s say that because the furnace died, your pipes
accidentally froze and there was water damage to your home. This water
damage, since it was sudden and accidental, could be covered by your
home insurance policy. If optional coverages have been added to the
home insurance policy, the whole event may be able to be covered by
that policy alone.
We get it. It’s confusing. To help illustrate these
differences, here’s a handy graphic:
Coverage limits for both home insurance and home
warranty policies vary depending on individual needs. A
larger house with complex home systems may need higher limits than
a smaller home with minimal home system exposures.
Coverage limits can have a large impact on overall premiums,
so individual policies and plans should be reviewed closely by an
agent and the customer to be sure that the right protection is in place.
When in doubt, call your independent agent.
They’re here to make insurance simple.
Disclaimer: This article is not expert advice. The
analysis of coverage is in general terms and is superseded
in all respects by the Insuring Agreements, Endorsements,
Exclusions, Terms and Conditions of the Policy. Some of the
coverage mentioned in this material may not be applicable in
all states or may have to be modified to conform to
applicable state law. Some coverages may have been
eliminated or modified since the publishing of this
material. Discounts may not be available in all
states. Limitations and conditions may apply. Premiums will
be based on benefits chosen. Please check with your local
Independent Auto-Owners Insurance Agent for details."
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