A home insurance policy and a home warranty both provide peace of mind, but they are different. Discover how they differ and determine what may be best for you.
If you are reading this, you likely have homeowners insurance as required by your lender, but you may also have a home warranty. The following provides an overview of the differences between a homeowners policy and a home warranty.
Buying a home is a major investment, and you want to make sure your investment is protected.
Compare and Contrast a Homeowners Policy and Home Warranty
| Homeowners Insurance Policy | Home Warranty |
|---|---|
| Pay a premium to an insurance company to pay for damage after a covered loss. Cost depends on various factors, including where you live, home replacement cost value, and construction. | Annual service agreement/plan typically not linked to home value. |
| The deductible ($500, $1,000, $2,500, etc.) is the amount an insured pays for a covered loss before a payment is made by the insurance company. Policies have various deductibles such as a hurricane deductible and all other perils deductible. | Service fee (usually $75-$150) per visit |
| Not required by federal or state law, but lenders require it until the mortgage is paid off. | Not required by law. Some homeowners consider additional protection when purchasing a home with older appliances or systems. |
| Premium paid directly to the insurance company by the insured or via a mortgage escrow account. | Monthly or other payment plans may be set by the home warranty provider. Some sellers may include a home warranty as part of the sales agreement. |
| Covers the interior and exterior of your home according to the terms of your policy. | Home warranties are focused on systems and appliances. |
| Pays for covered damages from sudden, accidental, unexpected events such as break-ins, fires, hurricanes, and wind as outlined in the terms of your policy. | Typically covers sudden events and normal wear and tear on major home systems and appliances, but this can vary depending on the terms of your home warranty. |
| The policy does not cover damage to an appliance or system (e.g., a water heater, refrigerator, or HVAC) but may cover a loss caused by a system (e.g., a pipe leak that damages drywall). Check your policy for specifics. However, subject to exclusions, damage to appliances or systems caused by a covered peril may be covered. | Some warranties cover appliance malfunction or system breakdown. This varies with the terms of the warranty. |
| Limits and exclusions apply according to the policy. Review your policy for specifics. | Warranties outline annual limits and specific exclusions. |
Check Your Policy
Don’t wait until an incident happens. Be proactive and review both your policy and warranty in advance to ensure you are prepared. Check your Citizens policy to understand exactly what is and isn’t covered. Reading the fine print can provide peace of mind knowing what is protected.
Still have questions? Your agent is your best resource for your Citizens policy. Reach out and schedule a policy review to help make sure you’re prepared for what’s next.
