Home warranties provide coverage for appliances and other covered items in your house, while home insurance covers the house itself and your personal property from covered perils.
Both home warranties
and home insurance can help protect you from disaster, but homeowners insurance will offer you many more coverage options. Owning a home is both an American dream and a huge responsibility. To protect your investment, you can buy a home warranty and home insurance. But which one is better? Jerry
is here to let you know the differences between the two and which is right for you. The difference between home warranty and home insurance
A home warranty and home insurance perform similar functions for the items in your home. They also have some key differences.
Home Warranty
A home warranty provides coverage for the items in your home, paying for repairs or replacement when an appliance or other covered item breaks down. A home warranty is almost a necessity for an older home, especially if you just bought it and have no idea how old the appliances
and systems are, or if they might break down in the near future. When shopping for a home warranty, look for one that offers the most protection for any items in your home. The best home warranties provide coverage for the following systems and appliances in your household:
Make sure to read the fine print of the warranty to determine any limits on coverage, and decide if you are comfortable with them before purchasing the plan. Most home warranties cost anywhere from $300 to $500 a year.
Home insurance
Home insurance covers the house itself in the event that it is damaged by a covered peril
. It also covers your personal property and provides liability coverage. Home insurance
is only required if you borrow money from a lender to buy the house; most lenders require you to carry insurance to protect the investment the company has made on your property. If you no longer have a mortgage
, you can opt to not carry home insurance, though it is recommended that you still carry it.Coverage amounts and coverage areas can vary by state and policy type, so make sure that you understand your coverage options before buying what you need. Most home insurance policies include the following coverages:
Personal property coverage
Additional living expenses
You can also opt for additional insurance coverage to protect your home, including:
Flood and earthquake insurance
Equipment breakdown protection
Scheduled personal property insurance
Personal umbrella coverage
Identity theft protection
As with a home warranty, home insurance usually has its limitations; however, many insurance companies allow you to purchase additional coverage that goes beyond what's offered by a standard policy. The cost of home insurance
varies according to where you live, but the average annual premium is $1,200. Which is better, a home warranty or home insurance?
Determining which option is better for your needs is pretty straightforward. Many experts recommend both, but if you have to choose, a home insurance policy more often gives the best benefits for the amount of money you spend on it.
Plus, many home insurance policies offer additional protection for systems and appliances in your home for a relatively low price. You may be required to hold homeowners insurance by your lender anyway.
A home warranty makes sense if your regular home insurance does not offer protection against equipment breakdown. Normally, a home insurance policy does not cover the everyday wear and tear of appliances and systems, meaning if the equipment breaks down due to age, then the policy does not pay out. A home warranty can help protect against breakdowns in such situations.
Whereas a home insurance policy protects your property and belongings from loss in case of an accident, a home warranty only protects against equipment breakdown. Ideally, getting both is the best option; however, if you have to choose, then purchase a home insurance policy, preferably with added equipment breakdown protection
. 
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