Twice a week, our CEO and resident money guru Jean Chatzky tackles your burning questions in the HerMoney newsletter. We’ve pulled some of the best to feature on our website — and this one made the cut! Got a question for Jean? Send it her way right here.
Q: Today’s question comes from Morgan. She writes: “What’s the difference between home insurance and a home warranty?”
A: Think of it this way – home insurance protects you from disasters, while a home warranty helps with everyday breakdowns.
Homeowners insurance – which is generally required by mortgage lenders – focuses on the structure of your home and your liability. If a storm knocks a tree onto your roof, a pipe bursts and damages the walls, or someone gets injured on your property, your insurance policy is designed to help cover those costs.
A home warranty, on the other hand, covers the systems and appliances inside your home as they wear out over time. If your HVAC system quits after years of use, your water heater fails, or the dishwasher suddenly stops working, a warranty plan may help cover the repair or replacement. Unlike homeowners insurance, which lenders require, purchasing a home warranty is voluntary. Many people purchase them to protect major systems and appliances in their homes.
There can be some overlap. For example, if a pipe bursts, your homeowners insurance will typically cover the damage caused by the water — like ruined floors or drywall — but not necessarily the broken pipe itself, which is where a warranty might come in.
Another key difference is cost structure. Home insurance usually comes with a higher deductible when you file a claim, while home warranties typically charge a service fee (often around $60–$125) each time a technician comes out.
Bottom line? Insurance protects you from the big, unexpected events, while a warranty can help soften the blow of those annoying (and often expensive) household breakdowns. Some homeowners choose to carry both so they’re covered from the roof down to the refrigerator.
MORE ON HERMONEY:
- Ask Jean: How Do Reverse Mortgages Work?
- 3 Steps To Lower The Cost Of Your Homeowners Insurance Premiums Right Now
- 13 Women On Where They Keep Their Emergency Funds (and Why They Love HYSAs)
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