Luis Pazos 
As a homeowner, you have a ton of essential costs to cover, and home insurance is one of them. But have you ever heard of a home warranty? You might get an offer for one either when you buy a home or as a freebie from the seller. It can be pretty confusing if you’re new to this. So, what’s the deal with home insurance vs. a home warranty?
First off, you gotta have home insurance because your mortgage company requires it, but a home warranty is optional.
What Is a Home Warranty?
A home warranty isn’t a must-have, but it can definitely make you feel more secure. Think of it as a year-long, renewable service plan that kicks in when something major in your home breaks. It usually covers repairs or replacements for key systems and appliances, depending on your plan. This way, it works alongside your home insurance to cover things insurance doesn’t.
Shopping around is crucial if you’re considering a home warranty. Popular providers include American Home Shield, America’s 1st Choice Home Club, Complete Care Home Warranty, Cinch Home Services, and Select Home Warranty.
How Much Do Home Warranties Actually Cost?
The price can swing between $200 to $800 yearly, depending on what’s covered, the company, and your home specifics.
What Does a Home Warranty Cover?
You can customize your home warranty to cover a wide range of systems and appliances. For instance, a plan with Complete Care Home Warranty can focus on just appliances, just systems, or both. These typically include:
- Electrical Systems: Wiring, fuse boxes, outlets
- Plumbing: Water heaters, pipes, pumps
- Heating and Cooling: A/C units, heat pumps, heating systems
- Appliances: Washer, dryer, fridge, oven, microwave
Many companies offer add-ons like coverage for pools, electronics, or well pumps.
Pros and Cons of a Home Warranty
A home warranty can feel like wasted money if you don’t use it, but it’s a godsend if a major system breaks down.
What Is Home Insurance?
Unlike a home warranty, home insurance is non-negotiable if you have a mortgage. It’s there to protect you from serious damage to your home from things like fires, storms, or theft. If something major happens, like a fire leveling your whole neighborhood, your home insurance helps you recover financially.
What Does Home Insurance Cover?
Typically, home insurance covers:
- Your personal belongings
- Your home and structures like sheds
- Fire, water, and weather damage
- Liability for damage to others’ property
- Medical bills if someone’s hurt on your property
- Temporary living costs if your home is unlivable
You can beef up your policy with add-ons covering things like water backups, floods, and earthquakes.
If you’re hunting for home insurance, check out companies like Lemonade, HomeInsuranceConnect, Liberty Mutual, Hippo, and Travelers.
Pros and Cons of Home Insurance
You need home insurance if you have a mortgage, but it’s good to know the benefits and downsides too.
How Home Insurance Compares to Home Warranties
You must have home insurance, but a home warranty is optional. However, a home warranty can complement your insurance by filling in the gaps. For example, your home insurance might cover water damage from a busted water heater but not the replacement of the heater itself. That’s where the warranty shines.
The Bottom Line: When to Buy a Home Warranty
Home insurance is a must, but a home warranty is up to you. Consider getting one if:
- You prefer a predictable annual fee over surprise repair costs
- You don’t mind working with specific contractors
- You want extra peace of mind
- You own an older home with likely future breakdowns
- You’re selling and want to attract buyers with the added perk
In the end, while a home warranty isn’t essential, it can offer significant savings and peace of mind. Shop around to compare the best deals, and you might find one that fits your needs at a price you can live with.
