Home Insurance Vs Home Warranty: What Buyers Should Know

Home Insurance Vs Home Warranty: What Buyers Should Know

First-time home buyers often hear the terms home warranties and home insurance. They often have no clue about what these terms mean. These two terms — home warranties and home insurance — may sound similar, but their differences exist.

Insurance covers unexpected events, whereas a warranty covers expected ones.

A home warranty covers the malfunction and breakdown of a home’s internal systems and appliances. Whereas property insurance protects the home against damages like floods, fire, burglary, etc. It is essential to distinguish homeowners’ insurance from home loan insurance covering default risks.

Read on to learn more about home insurance and home warranties for home buyers.

What is Home Insurance?

In general, house insurance protects a home’s structure. Damage caused by unavoidable events such as floods, fires, or burglaries is covered by property insurance. It also protects a homeowner’s investment (house) against accidents and building failures through an agreement between the homeowner and a third-party insurer.

What Does Home Insurance Cover?

Some policies even cover injuries sustained by others on the property through general liability insurance. The lien holder (the bank) will require homeowners’ insurance on any home purchased with a mortgage.

According to the (III) Insurance Information Institute, standard homeowners’ insurance policies cover four essential coverage.

• Home Structure Coverage

When a covered peril damages or destroys the house, this policy pays for repairs or reconstruction. Other structures on the property, such as tool sheds, garages, decks, and gazebos, are usually covered.

• Personal Belongings Coverage

Personal belongings such as clothes, furniture, and sports equipment are covered if destroyed or stolen. Expensive items may require a special endorsement or a floater to ensure adequate protection.

• Liability Protection

The policyholder, their family members, and their pets are covered by liability coverage if they cause injuries or property damage to another person. Intoxicated guests, falling trees, dog bites, and domestic worker injuries are among the most common liability claims.

• Additional Living Expenses

Hotel stays, meals, and other living expenses are covered if one’s house becomes uninhabitable due to a covered peril.

What Disasters Does Home or House Insurance Cover?

There are 16 disasters and perils covered by property insurance policies:

  • Fire or lightning
  • Explosion
  • Volcanic eruption
  • Windstorm or hail
  • Weight of ice, sleet, or snow
  • Riot or civil commotion
  • Vehicle damage
  • Aircraft damage
  • Smoke
  • Theft
  • Vandalism or malicious mischief
  • Falling object
  • Overflows or discharges of water or steam from an air-conditioning system, sprinkler system, or household appliance.
  • An air conditioner, steam heater, or automatic fire-protection system that rips apart, cracks, burns, or bulges suddenly and accidentally.
  • A household appliance, plumbing system, HVAC system, or automatic fire-protection sprinkler system freezing.
  • An electrical current generated artificially causes sudden or accidental damage.

A standard house insurance policy does not cover damage caused by floods or earthquakes. Purchasing separate flood or earthquake insurance based on the location may be a good idea. Check with an insurance agent to see if either is recommended.

What is Home Warranty?

A home warranty covers servicing and replacements for household appliances and systems. Flat rates are available on service calls if one pays a monthly or annual fee. A technician from one’s house warranty company diagnoses and fixes the problem if an appliance or system covered by the plan breaks down – and they only have to pay a service call fee. A house warranty in a real estate transaction usually begins when the deal closes. An existing house warranty may take 15 to 30 days to take effect.

Coverage Under Home Warranty

In both new and pre-owned homes, home warranties cover appliances and systems. Most companies offer three types of house warranty plans:

  • Plans covering appliances (e.g., clothes washers, dishwashers, and refrigerators)
  • A system plan (e.g., an HVAC system, a plumbing system, and an electrical system)
  • Combination Plan (all appliances and systems included)

Most companies allow the insured to add coverage (for an extra fee) for specific items not covered by the standard plan. The most common “add-ons” are pools, spas, wells, septic systems, lawn sprinkler systems, and additional appliances (such as a second dishwasher or air conditioner).


The coverage of home buyer insurance and warranties is quite different. Due to this, some homeowners choose to have both policies. These individuals can receive full reimbursement for an incident such as a leaky appliance. The warranty covers the appliance, and the insurance covers the damage it caused.

Invest in home insurance and home warranty while buying an apartment from Piramal Realty. At Piramal Realty, one can find luxury apartments in the prime locations of Mumbai. Recent infrastructure improvements have provided extraordinary lifestyle amenities and improved connectivity in these posh areas.

Disclaimer- This article is based on the information publicly available for general use as well as reference links mentioned herein. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim /disown any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.

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