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Difference between Home Insurance and Home Warranty

When purchasing a home, you often come across two items: Home Insurance and Home Warranty. Despite sounding similar, there are distinct differences between the two. Many customers inquire about these differences, so let's briefly explain them:

Homeowner's Insurance

As the name suggests, it is insurance for your home. It covers the costs of repairs, maintenance, or reconstruction of a home that has experienced problems due to disasters. These disasters can include floods, fires, tornadoes, civil disturbances in the vicinity, or if a vehicle collides with the house.

When buying a home through financing, financial institutions lending you money usually require homeowner's insurance. Since the house itself is their collateral, it is essential to have coverage for damages caused by disasters; otherwise, the value of the collateral decreases.

Typically, homeowner's insurance also compensates for damaged furniture, clothing, and other belongings affected by the disaster.

The purchase of homeowner's insurance is typically the responsibility of the buyer.

Home Warranty

Now, what about Home Warranty?

Home Warranty is a program where buyers request a one-year agreement from the seller to receive discounts on the repair costs of appliances and mechanical systems (furnace, AC, hot water heater, etc.) that malfunction due to normal use.

Buyers commonly request sellers to purchase a one-year agreement. In the event of a malfunction, the home warranty company either diagnoses and fixes the issue or connects the homeowner with a professional who can.

Home warranties generally cover home appliances, electrical systems, heating and cooling systems, plumbing systems (toilet, water heater, sewer and drain line issues), and other miscellaneous items like garage doors and doorbells. However, it's important to note that coverage varies slightly depending on the terms of each agreement, so consultation with the warranty company about the covered items is crucial.

In the case of home warranties, buyers typically request the seller to make the purchase. For more specific information about insurance and warranty, it is recommended to directly contact insurance or warranty companies.

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