Do You Need A Home Warranty If You Have Homeowners Insurance?

When it comes to protecting your home, two options often come to mind: homeowners' insurance and home warranties. Both play essential roles in protecting your property, but they serve different purposes. Homeowners' insurance covers damage caused by disasters, accidents, or theft, while a home warranty covers the cost of repairing or replacing home appliances and systems that break down due to normal wear and tear.

If you already have homeowners insurance, do you still need a home warranty? Let us explore the differences and why it may be wise to consider both.

What Is Homeowners Insurance?

Homeowners' insurance is a policy that protects your home and belongings from a variety of risks. It is typically required by mortgage lenders and provides coverage for damages resulting from events such as fire, theft, vandalism, or weather-related issues. A standard homeowners insurance policy will generally cover the following:

Structural damage: Coverage for your home's structure in case of fire, storms, or other unexpected events.
Personal property protection: Safeguarding your personal belongings, including furniture, electronics, and clothing, against theft or damage.
Liability: Offers financial protection if someone gets injured on your property and sues you.

Homeowners' insurance provides peace of mind, knowing that if a disaster strikes, your house and possessions are protected. However, it does not cover the cost of repairs for your home’s normal systems and appliances if they break down due to regular wear and tear.

What Is A Home Warranty?

A home warranty is a service contract that helps cover the cost of repairing or replacing household systems and appliances that break down due to normal wear and tear. A typical home warranty will cover major systems such as:

HVAC systems (heating, ventilation, and air conditioning)
Plumbing (pipes, drains, water heaters)
Electrical systems (wiring, electrical panels)
Kitchen appliances (refrigerators, dishwashers, stoves)
Laundry appliances (washers, dryers)

Unlike homeowners insurance, which covers damages from disasters or accidents, a home warranty is designed to protect you from the costs of repairs when your appliances or systems break down over time. It is a useful tool, especially for homeowners with older homes or appliances that are more likely to experience issues.

Home Warranty vs Insurance: How Do They Differ?

While both a home warranty and homeowners' insurance offer protection, they cover different types of damage. Understanding the distinction can help you decide if you need both.

Coverage Type: Homeowners insurance covers sudden damage caused by external factors, such as fire, theft, or weather, while a home warranty covers damage resulting from normal wear and tear on appliances and systems.
Protection Areas: Homeowners' insurance protects the structure of your home and personal property. A home warranty protects the internal systems and appliances that keep your home running smoothly.
Cost Structure: Homeowners' insurance typically involves higher annual premiums and deductibles, depending on the coverage limits. A home warranty, on the other hand, has a lower monthly premium and charges a service fee for each repair or replacement request.

In simple terms, homeowners' insurance is for the unexpected and catastrophic events, while a home warranty is for the inevitable breakdowns of everyday home systems and appliances. Many homeowners find that having both offers the most comprehensive protection.

Do I Need a Home Warranty If I Have Homeowners Insurance?

Now that we understand the difference between the two, the question remains: If you already have homeowners insurance, do you need a home warranty? The answer depends on your personal circumstances, the condition of your home’s appliances and systems, and your financial situation.

Here are a few reasons why you may want to consider purchasing a home warranty in addition to homeowners' insurance:

Coverage for Wear and Tear: Homeowners insurance does not cover the repair or replacement of items that break due to normal wear and tear. If your refrigerator, air conditioner, or water heater breaks down, homeowners' insurance will not cover the cost of repair or replacement. A home warranty will.
Avoiding Large Repair Bills: The cost of repairing or replacing home appliances and systems can be substantial. Without a home warranty, you may face thousands of dollars in repair bills. A home warranty limits your out-of-pocket expenses by covering the cost of repairs and replacements, usually for a low service fee.
Predictable Budgeting: With homeowners' insurance, you pay an annual premium and a deductible if you need to file a claim. A home warranty typically has a set monthly premium and a fixed service fee, making it easier to budget for repairs and replacements. This predictability can be particularly helpful for homeowners on a fixed income or those trying to maintain a balanced budget.
Protection for Older Homes: If your home is older, your appliances and systems are more likely to break down due to age and wear. A home warranty is particularly beneficial for older homes or those with aging appliances, as it offers coverage that homeowners' insurance typically does not.
Peace of Mind: Homeownership comes with many responsibilities. A home warranty can relieve some of the stress by offering protection from unexpected repair costs, allowing you to focus on enjoying your home rather than worrying about the next breakdown.

Scenarios Where Both Homeowners Insurance and a Home Warranty Are Needed

Imagine you have a water heater that breaks down. Your homeowners' insurance will not cover the cost of replacing it, as it is a system that has worn out over time. However, if a water leak from the water heater causes damage to your flooring and walls, your homeowners' insurance will likely cover the repair of the resulting damage.

In another scenario, let’s say your HVAC system fails during the peak of summer. Your home warranty will cover the repair or replacement of the system. However, if the HVAC system fails due to a lightning strike or fire, your homeowners' insurance would cover the damage to the system and the home’s structure.

In both examples, having both a home warranty and homeowners insurance would provide comprehensive coverage, ensuring that both system or appliance breakdowns and the resulting damages are covered.

Common Exclusions in Home Warranty Coverage

While a home warranty can save you money, it is important to understand its limitations and exclusions. Here are a few things that are commonly not covered by home warranties:

Pre-existing conditions: Most home warranties do not cover appliances or systems that were already broken or malfunctioning at the time the warranty was purchased.
Improper maintenance: If an appliance or system fails due to neglect or improper maintenance, it may not be covered under your warranty.
Cosmetic damage: A home warranty typically does not cover cosmetic damage or issues that do not affect the system's or appliance's functionality.
Natural disasters: Damage from natural disasters, like floods, earthquakes, or hurricanes, is not covered by a home warranty. These types of damages are typically covered under a standard homeowners' insurance policy.

Make sure to read the terms and conditions of your home warranty carefully to fully understand what is covered and what is excluded.

How Complete Protection™ Can Help

At Complete Protection™, we understand that as a homeowner, you need reliable protection for your systems and appliances. Our home warranty plans are designed to provide comprehensive coverage against unexpected repair costs, all without the high premiums and complicated terms of homeowners' insurance.

If you have any questions about how our home warranty services can complement your homeowners' insurance, please don't hesitate to contact us today. We also recommend consulting a home inspector to ensure your home’s systems and appliances are in good condition before purchasing a warranty.